What are the common exemptions claimed by North Carolina debtors?

In bankruptcy, exemptions function as property allowance which enable a debtor to keep property through bankruptcy. Each state has its own exemption under state law, and there are also federal bankruptcy exemptions that are applicable in some situations. There are timing requirements not discussed in this answer, but residents of North Carolina will typically claim North Carolina Statutory exemptions. Several are very frequently claimed, including the homestead exemption, the motor vehicle exemption, the household property exemption, and the wild card exemption. Elsewhere, we list the exemptions at greater length.

Homestead Exemption

The North Carolina statutory homestead exemption is provided by NCGS 1C-1601(a)(1), and allows a debtor to exempt up to $35,000 of value in property used as a residence. For most purposes, the net value after subtracting loans owed on the home is what matters for the exemption. If a husband and wife jointly own the property, they are considered to each own half, and can generally claim a $35,000 exemption each. Note that tenancy by the entirety, a particular form of martial property ownership, may also protect a house from individual creditors. There are special rules for widows and widowers.

Motor Vehicle Exemption

The North Carolina statutory motor vehicle exemption is provided by NCGS 1C-1601(a)(3), and allows a debtor to exempt up to $3,500 of value in one car. A debtor can only use this exemption on a single vehicle, and cannot spread it amongst multiple cars, even if they are worth less than $3,500 combined. Often, a debtor will use some of the wildcard exemption as well if his or car is worth more than $3,500 net of liens on the car.

Household Property Exemption

The North Carolina household property exemption is provided by NCGS 1C-1601(a)(4), and allows a debtor to exempt between $5,000 and $9,000 of value in household property. Each debtor has a base exemption of $5,000, incremented up by $1,000 for each dependent up to a max of $9,000. To qualify under this exemption, the property must be for "personal, family, or household use" of the debtor or his or her dependents. Most significantly, this requirement disqualifies business property from this exemption. The property must also be either "household furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments." Many items will fall within the definition of household goods. Use of this exemption permits North Carolina debtors to retain their incidental personal property.

Wild Card Exemption

The wild card exemption of NCGS 1C-1601(a)(2) is an aspect of the homestead exemption, and allows a debtor to claim up to $5,000 of property of any sort as exempt. However, this $5,000 is only available to extent that $5,000 is left over unused from the $35,000 homestead exemption. For example, if a homestead exemption of $20,000 is claimed, $15,000 is unused, so a wild card exemption of $5,000 can be claimed. On the other hand, if a homestead exemption of $32,500 is claimed, only $2,500 is unused, so the wild card exemption is limited to $2,500. Subject to this limitation, the wild card is quite broad, and is commonly used to exempt second cars, business property, and financial assets.

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