There are several types of bankruptcy, called Chapters. The most commonly used for personal bankruptcy are Chapter 7 and Chapter 13.
A Chapter 7 bankruptcy is also called ‘liquidation’. In Chapter 7 a debtor’s non-exempt assets can be sold or liquidated to pay the debtors unsecured debt. In S.C., state law provides exemptions that protect some of a debtor’s assets from sale. In over 95% of Chapter 7 cases nationwide, no assets were sold. Any unsecured debts remaining at the end of the case are erased.
Chapter 7 is not for everyone. If your income is below the state median income; or if you pass a means test, you can file under Chapter 7. If you cannot file under Chapter 7, Chapter 13 is available to you.
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In a Chapter 13 Bankruptcy, the debtor develops a plan to pay his/her creditors over 3 to 5 years. Under this plan, the secured creditors, like your mortgage lender, get paid first and the unsecured creditors, like credit cards, get paid next.
The bankruptcy court must approve your plan. Once approved the debtor pays the bankruptcy trustee. The trustee pays all of the creditors according to the plan. At the end of the plan any remaining unsecured debt is usually erased. Chapter 13 lets individuals stop foreclosure proceedings and cure delinquent mortgage payments over time. They must still make all mortgage payments that come due during the chapter 13 plan on time. Chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 trustee who then distributes payments to creditors. Exemptions are your equity in property that is protected from Creditors. Your creditors cannot take exempt property. Exemptions in South Carolina can include up to $50,000.00 in your home, $5,000.00 in a car, $2,500.00 in household furnishings, $500.00 in Jewelry, and $750.00 in tools of trade. There are other exemptions that may fit your situation. EXEMPTIONS
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Matthews & Megna, LLC
Attorneys and Counselors at Law
112 Oak Street 3400 West Avenue
843-662-9699 803-799-1700
Toll Free 877-253-7705
We are a debt relief agency. We help people find relief under the U.S. Bankruptcy Code.
