With so many people unwinding unprofitable businesses and adjusting their lifestyles after financial hardship, many are confused about assets a creditor can seize and if bankruptcy is the only way to protect themselves from the proverbial wolves at the door.
While we offer general information here, it is not comprehensive and not intended as legal advice.
Exempt property: hands off, creditors
We typically refer to property that creditors cannot reach as exempt property. Exempt property for North Carolina residents is set out in North Carolina General Statutes §1C-1601(a).
The most commonly applicable exemptions in North Carolina:
- $3,500 in an automobile
- $35,000 homestead exemption (note: debtor’s name must be on the deed)
- $5,000 for household goods and furnishings (including clothing, computers, art, guns, pets, jewelry, etc.), and an additional $1,000 for each dependent
- $2,000 for tools of the trade (such as a laptop if used for business purposes)
- A maximum of $5,000 in value of any property that would otherwise be nonexempt: stocks, bonds, equity above the maximum allowed for an automobile, etc. This is known as the “wild card” exemption, is limited to $5,000.00, and is further limited to the amount of any unused homestead exemption. So, if a debtor claims a $35,000.00 North Carolina homestead exemption, she cannot claim any wild card exemption in any amount. However, if she claims only a $30,000.00 North Carolina homestead exemption, she can use a wild card exemption to protect property worth up to $5,000.00.
In practical terms
If the only assets you own are exempt from creditors’ reach, they cannot force you to liquidate these assets to satisfy your debts. They can sue you, than can call you every day and they will often attempt to frighten you with consequences that the law prohibits. Our website and blog provide additional information, which, again, should not be construed as legal advice, but may point you in a helpful direction.
If you have any questions about your vulnerabilities or your rights as a debtor, consult with a qualified bankruptcy attorney. Even if you do not wish to file for bankruptcy protection, a qualified attorney can help you plan a strategy for dealing with your debts.