Understanding The Top NC Bankruptcy Exemptions

Attorney and Clients holding papers and meeting around a table to discuss bankruptcy exemptions

When you decide to declare bankruptcy in the state of North Carolina, it immediately stops all creditors from collecting debts. In cases of Chapter 7 or Chapter 13 bankruptcy, when your debts have been sorted out by law, the legal obligation to pay your debts is often eliminated or reorganized.

One of the biggest myths that often arises in the case of filing for bankruptcy is that you may lose your house, car, or other types of valuable property or assets. In most cases, this is not the case as these types of assets can often be listed as exemptions. There are also differences when it comes to state and federal regulations, and

in the state of North Carolina you are required to use the exemptions found in state law -- not the U.S. bankruptcy code. To help you understand the types of NC bankruptcy exemptions you may be able to claim, we have put together a comprehensive list to guide you in your bankruptcy journey. 

What is a Bankruptcy Exemption?

Bankruptcy exemptions in your state determine what assets of yours can be considered protected, and if you will be able to keep your car, house, pension, retirement fund, personal belongings and more in the case of a Chapter 7 bankruptcy. For Chapter 13, these bankruptcy exemptions will determine how much you’ll pay to unsecured creditors. To utilize NC bankruptcy exemptions, you must have been a citizen of North Carolina for two or more years. If you have not lived in the state for more than two years, you may choose between federal or state exemptions. Also if you and your spouse are filing together, you will each be able to claim the full exemption, doubling your limits. 

Here are some of the most important North Carolina bankruptcy exemptions to consider.


Homestead Residence Exemption

The Homestead exemption protects up to $35,000 in equity of a residential property, and $70,000 if filing as a married couple. If the filer is 65 or older whose spouse is deceased, this amount rises to $60,000. This exemption applies to any real and personal property, including a home, condominium, co-op or even burial plot. The property must also be owned by a North Carolina resident for at least 40 months. To calculate the equity of your home, subtract the loan balance from the market value of your home. If the property is secured by a loan, you are current on the payments and elect to continue making them, and the equity of the home is covered by your exemptions, you generally can keep this property through the bankruptcy. To learn more about if you qualify for the Homestead exemption, speak with a Greensboro bankruptcy lawyer.

Wildcard Exemption 

If you have residual money left over after applying the Homestead exemption, you may use up to $5000 towards any other personal property. This is known as the Wildcard exemption. North Carolina also had an additional Wildcard exemption in the amount of $500. None of these exemption may be applied if the debtor purchased the property within 90 days of filing bankruptcy.

Motor Vehicle Exemption

Under the motor vehicle exemption, you can exempt up to $3500 in equity of a vehicle. If you are able to exempt all or most of your equity, you will be able to keep the vehicle. If you are unable to exempt all of the vehicle’s equity, a trustee will decide if the nonexempt equity had enough value to warrant liquidating the vehicle, instead applying the rest to pay your unsecured creditors. This exemption does not apply if you have bought you vehicle within 90 days prior to filing for bankruptcy. If you owe money on your car, the same rules apply as in the Homestead exemption. Just subtract the loan balance from the market value of your car and see if the equity is covered by the exemption. 

Personal Property

NC bankruptcy exemptions also protect certain types of personal property of the debtors. A total of $5000 may be applied towards the protection of clothing, household goods, furnishings, appliances, books, electronics and similar items. An additional $1000 may also be claimed for up to four dependents. College savings accounts can also be exempt up to $25,000 as well as up to $2000 in items needed for a trade, like tools, professional books and other implements. 

Other Exemptions

There are numerous exemptions that can be claimed based on your needs and circumstance. Here are some other exemptions that may be beneficial:

  • Wages earned, but unpaid, for work done 60 days before the filing date.
  • Tax exempt retirement accounts are fully protected, including 401(k)s, 403(b)s, SEPs, Simple IRAs and defined benefits plans. Inherited IRAs and Roth IRAs are also fully protected.
  • Legislators, firemen, rescue workers, law enforcement, teachers, state, municipal, county and city employees all have unlimited protection for pension benefits
  • Life insurance for the benefit of the debtor’s spouse or children is exempt
  • Alimony and child support are exempt upon proof that the payments are necessary for support
  • Unemployment compensation, worker’s compensation benefits, crime victim’s compensation, aid to families with blind or dependent children, Future Social Security benefits and Veteran’s benefits are all exempt. 

Federal Nonbankruptcy Exemptions

Although residents of North Carolina may not apply to federal exemptions, there are a set of nonbankruptcy federal exemptions that are available to protect property from creditors. These exemptions are just like the federal bankruptcy ones in that they help to protect you and your property, but are much harder to qualify for. 

Some of the areas covered by federal nonbankruptcy exemptions include:

  • Retirement benefits
  • Death and disability benefits
  • Survivor’s Benefits 
  • And Other Miscellaneous Nonbankruptcy Exceptions 

Greensboro Bankruptcy Lawyers

If you are interested in understanding the exemptions you and your family may qualify for, speak to one of our experienced Greensboro bankruptcy lawyers. We can help guide you through the process and ensure that you are getting the most protection available to you. For more information or to schedule an appointment, contact us today!

Office Locations


100 South Elm Street Suite 500
Greensboro, NC 27401
Phone: (336) 274-4658
Fax: 336-274-4540


551 Monroe Street
Eden, NC 27288
Phone: (336) 623-4600