Bankruptcy in North Carolina
Filing for bankruptcy can immediately stop creditor harassment, halt foreclosure efforts, and clear away certain debts. Also, North Carolina’s exemption laws help protect critical assets like your home and your car..
But filing isn’t one-size-fits-all. Choosing the right chapter and applying the correct exemptions requires a smart, tailored approach.
We can help you find the right guidance. We connect North Carolina residents with skilled bankruptcy attorneys who know the system. If you’re ready to start fresh, reach out today and take your first step forward.
Types of Bankruptcy in North Carolina
Bankruptcy is a legal process that gives individuals and businesses a way to reset their finances when debt becomes impossible to manage. Filing can eliminate some or even all of your financial obligations, depending on your situation.
If you’re struggling to keep up with mounting bills, you may have the option to file under Chapter 7, Chapter 11, or Chapter 13. Each chapter offers different benefits based on your income, the assets you want to protect, and your long-term goals.
Choosing the right path isn’t always simple, which is why working with an experienced bankruptcy attorney can make a big difference. They can help you assess your options and guide you through the filing process from start to finish.
In North Carolina, bankruptcy cases are adjudicated by the U.S. Bankruptcy Courts, which are organized into three districts: Eastern, Middle, and Western. Each district serves specific counties and holds court sessions in various cities to accommodate residents throughout the state.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy can be a powerful tool for individuals who need to clear overwhelming debt and make a fresh financial start. It’s often the right choice for people with limited income and few options to catch up. Before filing, it’s important to take an honest look at your earnings, expenses, and overall financial health.
Generally, people who qualify for Chapter 7 have experienced a loss of income or a major change in circumstances. However, you may have to give up certain assets like a second car, valuable collectibles, or home equity.
Once your case is filed, an automatic stay is triggered that puts a temporary stop to foreclosures, wage garnishments, and collection calls. However, not every debt is wiped clean; obligations like student debts or court-ordered restitution remain.
In North Carolina, qualifying for Chapter 7 bankruptcy involves passing the means test, which assesses whether your income is low enough to file under this chapter. As of April 1, 2025, the median annual income thresholds in North Carolina are:
- 1-person household: $63,611
- 2-person household: $80,315
- 3-person household: $94,750
- 4-person household: $113,793
- Each additional person: Add $11,100
Chapter 11 Bankruptcy
Chapter 11 bankruptcy tends to be more complicated than other types. Instead of liquidating assets to satisfy debts, it focuses on creating a reorganization plan. This plan, typically running between four and eighteen months, restructures how debts are paid, making them more manageable.
Filing for Chapter 11 bankruptcy requires laying out a complete and honest view of your financial situation. You’ll need to submit records about your assets, debts, income, expenses, and a plan for reorganizing payments.
The primary forms you’ll need to file include:
- Voluntary Petition for Individuals Filing for Bankruptcy (Form B101)
- Summary of Assets and Liabilities (Form B106)
- Detailed Schedules (A/B through J) listing all property, debts, income, and expenses
- Statement of Financial Affairs (Form B107)
- Chapter 11 Statement of Current Monthly Income (Form B122B)
- List of Creditors (Creditor Matrix) with full contact information
- Schedule of Executory Contracts and Unexpired Leases (Form B106G)
- Proposed Disclosure Statement and Reorganization Plan
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, often called the wage earner’s plan, is designed for people with regular income. In NC, once you file your case, the court appoints a trustee to review your assets, liabilities, income, and expenses.
Next, you’ll propose a repayment plan that usually runs between three and five years. How flexible your plan is depends on how reliable your income is and what property you want to protect. If you complete your plan, you may also have some or even most of your debts wiped out.
Chapter 13 is simpler and more structured for individuals with steady income. It’s meant to offer regular working people a manageable way to reorganize their debt without the higher costs and complications.
The Bankruptcy Process in North Carolina
There’s rarely a perfect moment to file for bankruptcy. But if it’s clear you won’t be able to pay off your debts within five years, it might be the right move. Filing can help you limit the financial damage, pause aggressive collection efforts, and give you a real chance to rebuild.
In North Carolina, getting started means gathering every piece of your financial information. You’ll need detailed records of your monthly expenses, outstanding debts, assets, and annual income. This paperwork is crucial—the court needs a full and accurate view of your finances to evaluate your case.
A key component of this process is understanding the state-specific exemptions that determine which assets you can protect. North Carolina mandates the use of its exemption laws, which are periodically updated. As of 2025, the following exemptions are applicable:
- Homestead Exemption: Protects up to $35,000 in equity for your primary residence.
- Motor Vehicle Exemption: Exempts up to $3,500 in equity for one motor vehicle.
- Wildcard Exemption: Allows you to apply up to $5,000 of any unused portion of the homestead exemption to any other property.
- Personal Property Exemption: Covers up to $5,000 in household goods, furnishings, appliances, books, and similar items, plus $1,000 per dependent (up to $4,000 total).
- Tools of the Trade: Exempts up to $2,000 in tools, books, and implements necessary for your profession.
- Retirement Accounts: Most tax-exempt retirement accounts, including 401(k)s and IRAs, are fully protected under North Carolina law.
Work With an Experienced North Carolina Lawyer
North Carolina’s exemption laws offer valuable protections, but filing for bankruptcy without understanding the rules can put you at risk of losing more than you should. A mistake early in the process could cost you time, money, and critical assets.
That’s why partnering with an experienced North Carolina bankruptcy attorney is so important. The right lawyer will guide you through every step.
Submit a request online or call us today at (866) 345-6784 to speak with an experienced lawyer in your area!
About the Author
Aaron is a professional legal writer with a B.S. in English Education from Southern Illinois University – Carbondale. He has written, published, and edited thousands of legal articles for RequestLegalHelp, which has connected over 5 million people to legal help in the United States.
With over five years of experience writing thousands of legal articles for law firms across the U.S. and Canada, Aaron specializes in covering federal, state, and city-level legal issues ranging from auto accidents to wrongful terminations.
If you would like to do more research, we can tell you about the basics of other areas of North Carolina law.
