In over 95% of Chapter 7 bankruptcy cases filed in Western North Carolina, consumers are allowed to keep all of their property. As an Asheville bankruptcy attorney, I speak with people daily about the concept of “exemptions,” which protect a limited amount of property from the reach of a consumer’s creditors. The bankruptcy code promises a “fresh start” in exchange for complete honesty about a consumer’s financial situation, and gives debtors full credit for the exemptions they are entitled to.
Consumers can use exemptions to protect property whether they file a bankruptcy case or not. Without exemptions, consumers who got in trouble with credit cards during the great recession or after a major medical expense would be permanently destitute without incentive to work again. Our banking system would fail to function properly. For that reason among others, exemptions have been an important part of North Carolina law for over a century.
Protecting Property Using Bankruptcy Exemptions
If you have lived in North Carolina for 2 years or more, you are entitled to use the North Carolina exemptions in bankruptcy (if you have not lived in North Carolina for more than 2 years, but live here now, you are likely entitled to protect property using either your previous state’s exemptions or the Federal Bankruptcy Exemptions). North Carolina law allows for, among other exemptions, the following:
Homestead Equity ($35k per spouse, $70k for married couple)
Wildcard Exemption ($5k per spouse, $10k for married couple, if full homestead not used)
Household Goods ($5k per spouse, $10k for married couple)
Automobile Exemption ($3.5k per spouse, $7k for married couple)
Retirement Accounts (fully exempt up to $1,000,000)
Business equipment or inventory ($2k per spouse, $4k for household).
These amounts are based on the liquidation value of the property, not the retail value. It would be exceptionally rare, for instance, for a Chapter 7 bankruptcy trustee to be able to liquidate personal property such as furniture, TVs, or other personal property because they are not worth much outside of the retail setting. Think about what you could sell the property for on eBay or craigslist or at a garage sale in order to properly value property for liquidation purposes.
If you live in Western North Carolina, and have questions about your rights under the bankruptcy code, do not hesitate to contact me for a free, initial, bankruptcy consultation.