North Carolina Bankruptcy Laws
North Carolina bankruptcy laws allow those who have gotten too deep into debt to file for court protection from legal action. Their assets, with a few exceptions, are then sold to repay the debts. Understanding these laws before you begin the bankruptcy process will help you know what to expect.
Bankruptcy Exemptions
Under North Carolina bankruptcy law, debtors may keep the following assets:
- Up to $18,500 for a homestead exemption
- Up to $3,500 for a vehicle
- Up to $5,000 in household furnishings and goods, books, animals, crops, musical instruments, clothing and appliances for the debtor. Each dependent also gets $1,000 for up to $4,000 for dependents. This does not include assets purchased less than 90 days before filing
- Life insurance proceeds
- Up to $3,500 in value for interest in any property, excluding assets purchased less than 90 days before filing, and minus any homestead exemption used
- Up to $2,000 for professional books and tools of the trade, excluding assets purchased 90 days before filing
- Prescription health aids
- Personal injury or death compensation
- IRAs and annuities
- Public employee pensions
- AFDC
- Crime victims’ compensation
- Unemployment
- Worker’s compensation
- Property in a business partnership
If you still owe money on your vehicle, it could be repossessed in spite of these exemptions. To keep your car, you must reaffirm the debt within 45 days of the 341 meeting.
Chapter 7 Bankruptcy Information
To file Chapter 7 bankruptcy, which is the form of bankruptcy that allows you to discharge most of your debts, you must pass a means test. The means test compares your income to that of the rest of North Carolina’s population. You must make at or below the median level to file Chapter 7.
Chapter 13 Bankruptcy Information
Chapter 13 bankruptcy is a repayment form of bankruptcy. While you still get legal protection from your creditors, you also must repay your debt under a court-ordered plan. The trustee will sell your assets to pay down your debt, and then you are responsible for the remainder.