North Carolina § 1C-1601 - What property exempt; waiver; exceptions.

§ 1C-1601. What property exempt; waiver; exceptions.

Exempt property. - Each individual, resident of this State, who is a debtor is entitled to retain free of the enforcement of the claims of creditors: The debtor's aggregate interest, not to exceed thirty-five thousand dollars ($35,000) in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the debtor or a dependent of the debtor; however, an unmarried debtor who is 65 years of age or older is entitled to retain an aggregate interest in the property not to exceed sixty thousand dollars ($60,000) in value so long as the property was previously owned by the debtor as a tenant by the entireties or as a joint tenant with rights of survivorship and the former co-owner of the property is deceased. The debtor's aggregate interest in any property, not to exceed five thousand dollars ($5,000) in value of any unused exemption amount to which the debtor is entitled under subdivision (1) of this subsection. The debtor's interest, not to exceed three thousand five hundred dollars ($3,500) in value, in one motor vehicle. The debtor's aggregate interest, not to exceed five thousand dollars ($5,000) in value for the debtor plus one thousand dollars ($1,000) for each dependent of the debtor, not to exceed four thousand dollars ($4,000) total for dependents, in household furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments, that are held primarily for the personal, family, or household use of the debtor or a dependent of the debtor. The debtor's aggregate interest, not to exceed two thousand dollars ($2,000) in value, in any implements, professional books, or tools of the trade of the debtor or the trade of a dependent of the debtor. Life insurance as provided in Article X, Section 5 of the Constitution of North Carolina. Professionally prescribed health aids for the debtor or a dependent of the debtor. Compensation for personal injury, including compensation from private disability policies or annuities, or compensation for the death of a person upon whom the debtor was dependent for support, but such compensation is not exempt from claims for funeral, legal, medical, dental, hospital, and health care charges related to the accident or injury giving rise to the compensation. Individual retirement plans as defined in the Internal Revenue Code and any plan treated in the same manner as an individual retirement plan under the Internal Revenue Code, including individual retirement accounts and Roth retirement accounts as described in section 408(a) and section 408A of the Internal Revenue Code, individual retirement annuities as described in section 408(b) of the Internal Revenue Code, and accounts established as part of a trust described in section 408(c) of the Internal Revenue Code. Any money or other assets or any interest in any such plan remains exempt after an individual's death if held by one or more subsequent beneficiaries by reason of a direct transfer or eligible rollover that is excluded from gross income under the Internal Revenue Code, including, but not limited to, a direct transfer or eligible rollover to an inherited individual retirement account as defined in section 408(d)(3) of the Internal Revenue Code. Funds in a college savings plan qualified under section 529 of the Internal Revenue Code, not to exceed a cumulative limit of twenty-five thousand dollars ($25,000), but excluding any funds placed in a college savings plan account within the preceding 12 months (except to the extent any of the contributions were made in the ordinary course of the debtor's financial affairs and were consistent with the debtor's past pattern of contributions) and only to the extent that the funds are for a child of the debtor and will actually be used for the child's college or university expenses. Retirement benefits under the retirement plans of other states and governmental units of other states, to the extent that these benefits are exempt under the laws of the state or governmental unit under which the benefit plan is established. Alimony, support, separate maintenance, and child support payments or funds that have been received or to which the debtor is entitled, to the extent the payments or funds are reasonably necessary for the support of the debtor or any dependent of the debtor. Definitions. - As used in this section, the following definitions apply: "Internal Revenue Code" means Code as defined in G.S. 105-228.90. "Value" means fair market value of an individual's interest in property, less valid liens superior to the judgment lien sought to be enforced. Waiver. - The exemptions provided in this Article cannot be waived except by: Transfer of property allocated as exempt (and in that event only as to the specific property transferred); Written waiver, after judgment, approved by the clerk or district court judge. The clerk or district court judge must find that the waiver is made freely, voluntarily, and with full knowledge of the debtor's rights to exemptions and that he is not required to waive them; or Failure to assert the exemption after notice to do so pursuant to G.S. 1C-1603. The clerk or district court judge may relieve such a waiver made by reason of mistake, surprise or excusable neglect, to the extent that the rights of innocent third parties are not affected. Recent purchases. - The exemptions provided in subdivisions (2), (3), (4), and (5) of subsection (a) of this section are inapplicable with respect to tangible personal property purchased by the debtor less than 90 days preceding the initiation of judgment collection proceedings or the filing of a petition for bankruptcy, unless the purchase of the property is directly traceable to the liquidation or conversion of property that may be exempt and no additional property was transferred into or used to acquire the replacement property. Exceptions. - The exemptions provided in this Article are inapplicable to claims: Of the United States or its agencies as provided by federal law; Of the State or its subdivisions for taxes, appearance bonds or fiduciary bonds; Of lien by a laborer for work done and performed for the person claiming the exemption, but only as to the specific property affected; Of lien by a mechanic for work done on the premises, but only as to the specific property affected; For payment of obligations contracted for the purchase of the specific real property affected; Repealed by Session Laws 1981 (Regular Session, 1982), c. 1224, s. 6, effective September 1, 1982; For contractual security interests in the specific property affected; provided, that the exemptions shall apply to the debtor's household goods notwithstanding any contract for a nonpossessory, nonpurchase money security interest in any such goods; For statutory liens, on the specific property affected, other than judicial liens; For child support, alimony or distributive award order pursuant to Chapter 50 of the General Statutes; For criminal restitution orders docketed as civil judgments pursuant to G.S. 15A-1340.38. Federal Bankruptcy Code. - The exemptions provided in The Bankruptcy Code, 11 U.S.C. § 522(d), are not applicable to residents of this State. The exemptions provided by this Article and by other statutory or common law of this State shall apply for purposes of The Bankruptcy Code, 11 U.S.C. § 522(b). Effect of exemptions. - Notwithstanding any other provision of law, a creditor shall not obtain possession of a debtor's household goods and furnishings in which the creditor holds a nonpossessory, nonpurchase money security interest until the creditor has fully complied with the procedures required by G.S. 1C-1603. History (1981, c. 490, s. 1; 1981 (Reg. Sess., 1982), c. 1224, ss. 1-7, 20; 1991, c. 506, s. 1; 1995, c. 250, s. 1; 1998-212, s. 19.4(j); 1999-337, s. 2; 2005-401, s. 1; 2009-417, s. 1; 2013-91, s. 3(a)(9).) Editor's Note. - Session Laws 2013-91, s. 5, made the amendment to subdivision (a)(9) by Session Laws 2013-91, s. 3(a), applicable to all inherited individual retirement accounts without regard to the date an account was created. Effect of Amendments. - Session Laws 2009-417, s. 1, effective December 1, 2009, in subdivision (a)(1), substituted "thirty five thousand dollars ($35,000)" for "eighteen thousand five hundred dollars ($18,500)" near the beginning, and "sixty thousand dollars ($60,000)" for "thirty-seven thousand dollars ($37,000)" near the end. Session Laws 2013-91, s. 3(a), effective June 12, 2013, added the last sentence to subdivision (a)(9). For applicability, see editor's note. Legal Periodicals. - For note on the nonpurchase security agreement as a relinquishment of the personal property exemption, see 15 Wake Forest L. Rev. 708 (1979). For article on North Carolina's new Exemption Act, see 17 Wake Forest L. Rev. 865 (1981). For article analyzing North Carolina's tenancy by the entirety reform legislation of 1982, see 5 Campbell L. Rev. 1 (1982). For article analyzing North Carolina's exemptions law, see 18 Wake Forest L. Rev. 1025 (1982).