Bankruptcy exemptions protect the equity in your property from creditors and the bankruptcy court—preventing the equity from being used to pay your creditors. Equity is the value of property after you subtract the amount of any liens against the property from its fair market value.

The equity in your home is one such asset in bankruptcy. And bankruptcy exemptions—including the homestead exemption—allow you to protect the property you will need to maintain a home and employment after bankruptcy.

Bankruptcy exemption amounts vary by state, so the amount you will be able to protect will depend on where you live and the type of bankruptcy you file (Chapter 7 or Chapter 13).

In North Carolina, bankruptcy exemptions play a crucial role in both Chapter 7 and Chapter 13 bankruptcy filings. These exemptions allow individuals to keep certain property from being liquidated to pay off creditors. The homestead exemption is particularly important for homeowners, as it protects the equity in their primary residence. As of the knowledge cutoff in 2023, North Carolina's homestead exemption allows individuals to exempt up to $35,000 of equity in their home, or $70,000 for a married couple filing jointly, provided they are both on the title. This amount can increase to $60,000 for individuals who are 65 or older and whose spouse is deceased, under certain conditions. It's important to note that these values are subject to change and can be adjusted periodically. Additionally, North Carolina offers other exemptions that can protect items such as personal property, vehicles, tools of the trade, retirement accounts, and more. The specific exemptions and amounts that apply can vary, so it's advisable to consult with an attorney to understand how North Carolina's bankruptcy exemptions apply to an individual's situation.