We've found that many of our clients hesitate to file for bankruptcy because they believe they'll lose everything. A common misconception is that, in bankruptcy, you can lose your home, your car and other things you need to go on living and working. Where's the hope in that?
The reality is that bankruptcy is intended to help you keep the things you need like your home, car and things you need - it's supposed to save you from financial ruin. Courts, lawmakers and creditors alike understand that people need to retain some assets in order to keep earning an income and preserve their lifestyles. That's why South Carolina law allows you to "exempt" some properties from bankruptcy proceedings.
Note that in some states, people filing for bankruptcy are allowed to choose between federal and state exemption systems. South Carolina is not one of those states - you must use the state exemptions if you file for Chapter 7 or Chapter 13 bankruptcy.
Exempt Properties in South Carolina
Some of the most common exemptions claimed by South Carolinians include:
- Housing: The most common fear expressed by people filing for bankruptcy - that they'll lose their homes - is covered by an exemption. You are permitted to exempt up to $58,255 of equity in your home. If you and your spouse are co-owners of a property and are jointly filing for bankruptcy, you can each claim that amount of equity, meaning the exemption increases to a maximum of $116,510. This is commonly known as "doubling."
- Vehicle: Again, the courts understand that you need a way to get to and from work if you're going to rebuild your finances. You are allowed to exempt up to $5,825 of equity in your car, truck, van or SUV.
- Tools of Trade: If you have particular tools, books or other implements you need to do your job, you can exempt up to $1,750 worth of those implements.
- Public Benefits: Unemployment, Social Security, veterans' benefits, workers' compensation, disability and other public benefits are exempt from bankruptcy.
- Retirement: Pensions and tax-exempt retirement accounts are also exempt from bankruptcy.
- Health Aids: There is an unlimited exemption for items prescribed by a doctor that you (or a dependent) need to deal with a medical condition.
- Alimony and Child Support: Any payments you are due to receive are exempt from bankruptcy.
- Personal Injury and Wrongful Death: The law views damages collected in a personal injury or wrongful death claim as making you whole, not as income; as such, those awards are generally exempt from bankruptcy.
- Personal Property: Clothing, household goods, furniture, appliances and certain other personal belongings can be exempted up to $4,650, and jewelry up to $1,175. The courts understand that you need to keep enough belongings to maintain your lifestyle.
In short, you should be able to keep the property you need to rebuild your finances - and your life - after filing for bankruptcy. However, the laws governing exemptions are complex and the exact exemptions you're able to claim may vary depending on your specific circumstances. That's why you need a veteran bankruptcy attorney on your side to help walk you through your options and find a way to relieve your debt.