What are nonexempt assets in a personal bankruptcy?

On Behalf of | Apr 22, 2021 | Chapter 13 Bankruptcy, Chapter 7 Bankruptcy |

Each state has its own bankruptcy laws, so you need to know how a personal bankruptcy works in North Carolina. Some states allow you to choose whether you follow federal or state guidelines for nonexempt assets. North Carolina observes both lists of exempt assets as long as the value doesn’t exceed state limits on exemption amounts.

Most residents keep their assets

The good news is most people who file for personal bankruptcy in North Carolina don’t lose their houses, cars or retirement accounts. Whether you have to give up a personal asset depends on how much you own. If you have more than one house, then the extra house is a nonexempt asset. Having one home, however, is usually exempt so that you have somewhere to live.

You must have an income lower than North Carolina’s median income to file for chapter seven bankruptcy. Some people who have a higher than median income could still file if they subtract certain expenses. Those who don’t qualify even with the subtractions would have to look into chapter 13 bankruptcy.

Examples of nonexempt assets

Expensive clothing, jewelry, valuable artwork and expensive musical instruments that you don’t need for work are nonexempt assets in a personal bankruptcy. There is a good chance that the trustee in charge of your case will sell them in order to help pay back your creditors. You may want to sell these items on your own to pay back your creditors as you might get more money out of them that way.

Married couples who are filing for chapter seven bankruptcy in North Carolina have an exemption amount twice as high as singles for jointly-owned assets. Assets that aren’t jointly owned have the same exemption amount as for singles.

Many people worry about losing everything when they struggle to pay off their debts, but the law offers protection to those who are on a low or average income. If your income and assets are low, you probably won’t lose anything besides the fee for filing bankruptcy.