Significance

• Chapter 13 bankruptcy is a U.S. Federal legal procedure. It takes place in a Federal Court, and Federal law governs, for the most part, how Chapter 13 works. However, North Carolina state law is important for a few reasons. First, North Carolina rules determine how the "means test" works for North Carolina residents. And, even more important, North Carolina state law controls what exemptions you may claim.
  
  

Means Test

• The means test is a complicated legal formula that you must calculate to determinate whether you qualify for Chapter 7 or Chapter 13 bankruptcy. In North Carolina, you can satisfy the means test if you can show that your income is high enough compared to the North Carolina state median income then you qualify to participate in Chapter 13. According to the U.S. Trustee Program, the median income in North Carolina as of October 2009 is $38,478 for a single member family, or $70,134 for a family of four.
  
  

Exemptions, Generally

• Exemptions play a significant role in bankruptcy because they determine what property you are allowed to keep when you file for Chapter 7. In addition, exemptions are important in Chapter 13 because to qualify for a Chapter 13 repayment plan, you have to show that your creditors will receive at least as much payment as they would in a Chapter 7 liquidation. So, your exemptions will determine in large part whether you actually qualify for Chapter 13 repayment.
  
  

North Carolina Exemptions

• North Carolina state law allows a homestead exemption worth up to $18,500 for your primary residence. You can also claim an automobile exemption worth up to $3,500, plus another personal property, such as household furnishings, exemption for up to $5,000. And, you can exempt the full amount of any work tools, referred to as "tools of trade." Finally, another important North Carolina exemption is the wildcard exemption worth between $500 to $5,000. You can choose any property to exempt under the wildcard exemption.
  
  

Court Locator

• The final important factor for a North Carolina Chapter 13 bankruptcy proceeding is determining what court will accept your bankruptcy petition. Federal bankruptcy are arranged according to state boundaries. In North Carolina, for example, there are 10 different bankruptcy courts arranged by geographic location. You can use the "Court Locator" (See Resources) to find the appropriate court for your location.