Bankruptcy protects some property from creditors, and in North Carolina that protection increased when the amount of residential home equity protected (legal term: exempt) from creditors went from from $18,500 per debtor to $35,000 per debtor. Gov. Perdue signed into law H.B. 1058, which became effective on December 1, 2009 to raise the NC homestead exemption.
If you file you are a resident of NC and file for bankruptcy, the NC exemption laws will likely apply in your case if you have lived there for at least two years.
- If sued, many people mistakenly think their home is automatically protected from creditors, but it isn’t and it can also depend on where you live.
The laws that protect property from creditors vary from state to state and are called exemptions. Some states have high or unlimited homestead exemptions, but other states, like North Carolina, have much lower exemptions on residential property.
The 2009 law change law gave NC homeowners a little more protection from creditor collection if sued, and also allows NC residents to rest easier knowing that they might be able to file for Chapter 7 or Chapter 13 without risking their family home.
If you don’t need to use all of the $35,000.00 homestead exemption to protect your residence (or cemetery plot), up to $5,000.00 can be used as a wildcard exemption, which can be used to exempt any type of property. The wildcard is often used to cover excess equity from other categories or property that doesn’t fit into any other category (such as cash, timeshares, real estate, land, household goods, collectibles, jewelry, vehicle, boat, etc.)
See also:
What Property Can I Keep If I File Bankruptcy? by Susanne Robicsek Charlotte NC Bankruptcy Lawyer
What Property Is Exempt (Protected) In North Carolina? by Susanne Robicsek
Bankruptcy, exemptions and a fresh start by Cathy Moran, CA Attorney
What Can I Keep After Bankruptcy? by Cathy Moran
What Can I Keep In a Bankruptcy? by Brett Weiss, MD Attorney
What Are Exemptions (or What Can I Keep in Bankruptcy )? by Brett Weiss
