If I file Bankruptcy will the Court take all my property?
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One of the biggest misconceptions about bankruptcy is that you lose all your property if you file bankruptcy. Generally speaking, the Bankruptcy Court is not interested in your household goods such as your couch and TV. They simply are not worth the effort to pickup and sell. If you have lived in NC for at least the last two years then you would be apply to claim NC exemptions, which are rather generous. If you have not lived in NC for at least two years then you would either be using exemptions from another State or Federal Exemptions.
Some of main exemptions in NC include $5,000 in household goods, $35,000 equity in a house, $3,500 equity in a car, and a $5,000 wildcard exemption that can be used on anything or stacked with the car exemption. As you can see for many considering bankruptcy this covers most if not all of their assets. So are you at risk to lose anything if you decide to file bankruptcy? |
My answer to prospective clients is simple: North Carolina’s laws protect “typical” lifestyles. Therefore, is it normal for someone to have average furniture in their house? Is it normal for someone to have a car with a car payment? Is it normal to have an IRS or 401K? Is it normal to have a house with a mortgage? The answer to all these questions is “yes”. And accordingly, the laws in North Carolina generally state that you can file bankruptcy and keep most if not all of these things. In essence, it’s a typical life and North Carolina protects typical lifestyles.
Conversely, North Carolina’s exemption laws don’t protect luxury, which I define as properties and belongings that are not normal. For instance, is it normal for someone to have valuable artwork or gold bars? Is it normal to have a brand new Mercedes that is paid in full? Is it normal to have a house or mountain home with no mortgage? Most people would answer No! And North Carolina law does not attempt to protect property that the average person does not have. In short it does not protect luxury.
While this discussion is of course broadly speaking in generalities it is the starting point for a discussion with an experienced bankruptcy attorney. If you have anything that may outside the definition of typical such a Mickey Mantle rookie card or gold coins it is best to let your attorney know in early on for planning purposes. At the end of the day many individuals who file bankruptcy as a last resort to escape an overwhelming amount of debt do not lose anything after filing bankruptcy.
Conversely, North Carolina’s exemption laws don’t protect luxury, which I define as properties and belongings that are not normal. For instance, is it normal for someone to have valuable artwork or gold bars? Is it normal to have a brand new Mercedes that is paid in full? Is it normal to have a house or mountain home with no mortgage? Most people would answer No! And North Carolina law does not attempt to protect property that the average person does not have. In short it does not protect luxury.
While this discussion is of course broadly speaking in generalities it is the starting point for a discussion with an experienced bankruptcy attorney. If you have anything that may outside the definition of typical such a Mickey Mantle rookie card or gold coins it is best to let your attorney know in early on for planning purposes. At the end of the day many individuals who file bankruptcy as a last resort to escape an overwhelming amount of debt do not lose anything after filing bankruptcy.