Updated May 20, 2016
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.
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.
Below are some of the most commonly used exemptions in North Carolina.
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.
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.
You can exempt the following personal property in North Carolina:
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).
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.
The following public benefits are exempt under North Carolina law:
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 are exempt if the debtor shows that such payments are necessary for support. (N.C. Gen. Stat. § 1C-1601(a)(12)).
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).
In addition to the above exemptions, you can also use the federal nonbankruptcy exemptions .
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.