North Carolina Bankruptcy Exemptions

The North Carolina exemption laws allow you to keep certain property in Chapter 7 bankruptcy and help determine how much you’ll pay to unsecured creditors in Chapter 13 bankruptcy. Read on to learn what property is covered by North Carolina’s bankruptcy exemptions.

General Information About the North Carolina Bankruptcy Exemptions

North Carolina debtors must use state exemptions because its law does not allow debtors to use the optional federal bankruptcy exemption system.

North Carolina also allows exemption "doubling," meaning married persons filing for bankruptcy may each claim their full exemption. However, doubling does not allow one spouse to exempt property that is deeded or titled in the other spouse's name.

To read more about how bankruptcy exemptions work in Chapter 7 and Chapter 13 bankruptcy, which state exemptions you can use, and more, see our Bankruptcy Exemption topic.

Commonly Used North Carolina Bankruptcy Exemptions

Below are some of the most commonly used exemptions in North Carolina.

Homestead and Burial Plot Exemption

The homestead exemption protects up to $35,000 in equity of any real or personal property used as a residence. This exemption rises to $60,000 if the debtor is age 65 or older, the property is held as tenants by the entirety or joint tenants with right of survivorship, and the debtor's spouse has died. (N.C. Gen. Stat. § 1C-1601(a)(1)).

Property owned as tenants by the entirety is exempt without any equity limit with respect to the debts of one spouse. (In re Chandler, 148 B.R. 13 (E.D. N.C. 1992)).

You can exempt up to $35,000 in equity of burial plots. You can only use this exemption if you haven’t used the homestead exemption. (N.C. Gen. Stat. § 1C-1601(a)(1)).

For more information, see The North Carolina Homestead Exemption.

Motor Vehicle

You can exempt up to $3,500 in one motor vehicle. (N.C. Gen. Stat. § 1C-1601(a)(3)). This exemption does not apply if you purchased the vehicle within 90 days of filing bankruptcy. (N.C. Gen. Stat. § 1C-1601(d)). To learn more about exemption cars, vans, trucks, motorcycles, and other motor vehicles in North Carolina, see The North Carolina Motor Vehicle Exemption.

Other Personal Property

You can exempt the following personal property in North Carolina:

• A total of $5,000 for clothing, household goods, furnishings, appliances, books, and the like, plus an additional $1,000 per dependent up to $4,000 total. (N.C. Gen. Stat. § 1C-1601(a)(4)). This exemption does not apply if you purchased the property within 90 days of filing bankruptcy. (N.C. Gen. Stat. § 1C-1601(d)).
• Personal injury and wrongful death compensation. However, certain claims connected to the accident are not exempt. (N.C. Gen. Stat. § 1C-1601(a)(8)).
• Qualified college savings accounts up to $25,000. There is an exception for some amounts contributed within the last 12 months. (N.C. Gen. Stat. § 1C-1601(a)(10)).
• Prescribed health aids. (N.C. Gen. Stat. § 1C-1601(a)(7)).
• Up to $2,000 in tools, professional books, and implements involved in a trade. (N.C. Gen. Stat. §1C-1601(a)(5)). This exemption does not apply if you purchased this property within 90 days of filing bankruptcy. (N.C. Gen. Stat. § 1C-1601(d)).

Wages

North Carolina provides an exemption for wages earned, but unpaid, for work done 60 days before the filing date. (N.C. Gen. Stat. § 1-362)).

A portion of earned, but unpaid, wages is protected by federal law. (15 U.S.C. § 1673).

Retirement and Pensions

Most retirement plans and pensions are exempt in North Carolina whether based on federal or state law. A list of the more common retirement arrangements follows.

• All tax exempt retirement accounts are fully protected under federal law including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans. (11 U.S.C. § 522(a)(3)(C)).
• IRAs and Roth IRAs have an unlimited exemption under state law. (N.C. Gen. Stat. § 1C-1601(a)(9)).
• Retirement benefits payable from another state government are exempt if the benefits are exempt in that state. (N.C. Gen. Stat. § 1C-1601(a)(11)).
• Firefighters and rescue workers have unlimited protection for pension benefits. (N.C. Gen. Stat. § 58-86-90).
• Legislators have unlimited protection for pension benefits. (N.C. Gen. Stat. § 120-4-29).
• Municipal, city, and county employees have unlimited protection for pension benefits. (N.C. Gen. Stat. § 128-31).
• Teachers have unlimited protection for pension benefits. (N.C. Gen. Stat. § 135-9).
• State employees have unlimited protection for pension benefits. (N.C. Gen. Stat. § 135-95).
• Law enforcement officers have unlimited protection for pension benefits. (N.C. Gen. Stat. § 143-166-30(g)).

Public Benefits

The following public benefits are exempt under North Carolina law:

• Unemployment compensation. (N.C. Gen. Stat. § 96-17).
• Workers' compensation benefits. (N.C. Gen. Stat. § 97-21).
• Crime victims' compensation. (N.C. Gen. Stat. § 15B-17).
• Aid to the blind and families with dependent children. (N.C. Gen. Stat. § 108A-36).
• Future Social Security benefits. (42 U.S.C. § 407 (a)).
• Veterans benefits. (38 U.S.C. § 5301).

Insurance

Life insurance for the benefit of the debtor's children or spouse is exempt. (N.C. Gen. Stat. § 1C-1601(a)(6)).

An employee group life insurance policy or proceeds have an unlimited exemption. (N.C. Gen. Stat. § 58-58-165).

Alimony, Child Support and Separate Maintenance

Alimony, child support and separate maintenance are exempt if the debtor shows that such payments are necessary for support. (N.C. Gen. Stat. § 1C-1601(a)(12)).

Wildcard

You can use any unused portion of the homestead or burial exemption, up to $5,000, to exempt any other property. This is generally referred to as a wildcard exemption. (N.C. Gen. Stat. § 1C-1601(a)(2)). This exemption does not apply if the debtor purchased the property within 90 days of filing bankruptcy. (N.C. Gen. Stat. § 1C-1601(d)).

North Carolina has an additional wildcard exemption in the amount of $500. (N.C. Const. Art. X, § 1).

Other Exemptions

In addition to the above exemptions, you can also use the federal nonbankruptcy exemptions .

Checking the Latest Exemption Amounts

This list may not include every exemption available in North Carolina and there may be exceptions to those that are listed. In addition, from time to time the bankruptcy exemptions and exemption amounts change. You can check bankruptcy exemption amounts on www.legalconsumer.com. Or do some research on your own. To learn how, see Nolo’s Legal Research Center.