South Carolina Bankruptcy Lawyer Explains Why Filing Can Be A Smart Move
When debt becomes unmanageable, many people feel like they've run out of options. Creditors are calling. Bills are piling up. The mortgage is behind. The car might be next. What started as a temporary setback has turned into a financial crisis with no clear way out. If that sounds familiar, you are not alone, and there is a legal path forward.
Bankruptcy is not a sign of failure. It is a federal legal tool designed specifically to give honest, hard-working people a second chance. And more South Carolinians are turning to it. According to the United States Bankruptcy Court for the District of South Carolina, bankruptcy petition filings in the state rose 12 percent in 2025 compared to 2024, outpacing the 11 percent national increase. The people behind those numbers are workers who lost jobs, families crushed by medical bills and homeowners who simply ran out of road after doing everything right for years.
So what does bankruptcy actually do? What types are available in South Carolina? What can you keep? And how does the process work? Our South Carolina bankruptcy attorneys at Benjamin R. Matthews and Associates, LLC explain what you need to know.
What Does Bankruptcy Actually Do?
When you file for bankruptcy, an automatic stay goes into effect immediately. According to the United States Bankruptcy Court for the District of South Carolina, the automatic stay prohibits most creditors from taking any collection action against you or your property from the moment the case is filed. That means collection calls stop. Foreclosure proceedings pause. Repossession attempts halt. The automatic stay gives you breathing room while the bankruptcy process works through the courts.
Beyond the automatic stay, bankruptcy can result in a discharge, which is the court's permanent order releasing you from personal liability for certain debts. Once a debt is discharged, the creditor is legally prohibited from any further collection efforts, including phone calls, letters and lawsuits. Discharged debts are gone. You are no longer legally obligated to pay them.
Not every debt can be discharged. Student loans, child support, alimony, most tax debts and debts resulting from fraud generally survive bankruptcy. But credit card balances, medical bills, personal loans and many other types of unsecured debt can be eliminated entirely, depending on the chapter under which you file.
What Types of Bankruptcy Are Available in South Carolina?
South Carolina residents typically file under one of two chapters of the federal Bankruptcy Code. The right choice depends on your income, your assets and what you're trying to accomplish.
- Chapter 7 Bankruptcy: Chapter 7 is often called the liquidation chapter. It is used by individuals who are unable to reorganize their finances through a repayment plan. In a Chapter 7 case, a trustee liquidates your non-exempt assets and distributes the proceeds to creditors. In exchange, most of your remaining dischargeable debts are wiped out entirely. Many Chapter 7 filers have few or no non-exempt assets, which means they keep most of what they own and still get a fresh start. The discharge is typically entered between 90 and 120 days after filing. To qualify, you must pass the means test, an income-based calculation that determines whether you have the financial means to repay some portion of your debts through a repayment plan instead.
- Chapter 13 Bankruptcy: Chapter 13 is the repayment chapter for individuals with regular income whose debts fall below a certain threshold. Rather than liquidating assets, Chapter 13 allows you to keep your property and repay creditors through a court-approved plan over three to five years. This option is particularly valuable if you're behind on mortgage payments and want to save your home, since a Chapter 13 plan can allow you to cure past-due amounts over time. It's also useful if you have assets you want to protect that would otherwise be liquidated in a Chapter 7 case. The discharge in Chapter 13 is broader than in Chapter 7 and is entered only after you complete all payments under your plan.
- Chapter 11 Bankruptcy: Chapter 11 is primarily a business reorganization tool, though individuals with very high debt levels who don't qualify for Chapter 13 may use it. Under Chapter 11, the debtor proposes a plan of reorganization that creditors vote on and the court must approve. There is no debt limit under Chapter 11, but it is a more complex and costly process than either Chapter 7 or Chapter 13.
- Chapter 12 Bankruptcy: Chapter 12 is available specifically to family farmers and family fishermen who meet the definition under the Bankruptcy Code. It works similarly to Chapter 13 in that it involves a repayment plan funded by future income, but it includes provisions tailored to the seasonal and irregular income patterns of agricultural and fishing businesses.
Most individuals in South Carolina file under Chapter 7 or Chapter 13. An attorney can review your income, assets and debt situation and tell you which option gives you the best outcome.
What Does the Process Look Like in South Carolina?
Before you can file for bankruptcy in South Carolina, you're required to complete credit counseling from a court-approved agency within 180 days before filing your petition. The U.S. Bankruptcy Court for the District of South Carolina maintains a list of approved counseling providers and explains the requirement in detail on its FAQ page. This can be done by phone or online and typically takes only a few hours.
After filing, you'll attend what's called a Meeting of Creditors, also known as a 341 meeting after the section of the Bankruptcy Code that requires it. The meeting is conducted by the case trustee and requires you to appear and answer questions about your financial situation under oath. The bankruptcy judge doesn't attend this meeting. Creditors may appear and ask questions, but in most consumer cases they don't. The meeting is usually brief.
Before receiving a discharge, you're also required to complete a financial management course from an approved provider. In a Chapter 7 case, that certificate must be filed within 45 days of the first date set for the Meeting of Creditors. In a Chapter 13 case, it must be filed before the last payment under your plan is made.
What Can You Keep When You File for Bankruptcy in South Carolina?
One of the most common fears about bankruptcy is losing everything. That fear is largely unfounded. South Carolina has its own set of exemptions under S.C. Code Ann. § 15-41-30 that protect certain property from creditors during bankruptcy. These exemptions cover your home equity up to a certain amount, your car up to a certain value, household goods and furnishings, tools and equipment you need for work, life insurance policies, retirement accounts and certain government benefits.
The practical result is that many people who file for Chapter 7 bankruptcy in South Carolina are able to keep their home, their car and their essential belongings while still discharging most or all of their unsecured debt. Chapter 13 offers even stronger asset protection, since it doesn't involve liquidation at all. An attorney can walk you through the specific exemptions that apply to your situation and show you exactly what you stand to keep.
How Can A South Carolina Bankruptcy Attorney Help Me?
The stigma around bankruptcy keeps too many people from getting relief they legally deserve. The reality is that the federal bankruptcy system was built for people in exactly your situation, honest people who worked hard and hit a wall they can't climb alone. Filing isn't giving up. For many South Carolinians, it's the moment everything starts to get better.
Attorney Ben Matthews has been helping South Carolina residents file for bankruptcy and reclaim their financial lives for more than 30 years. Our firm understands what it takes to get a case filed correctly, meet court deadlines and get you to a discharge without unnecessary delay.
If you're ready to talk about your options, contact us for a free consultation. Our South Carolina bankruptcy attorneys proudly serve clients from offices in Columbia and Rock Hill.
★★★★★
"Attorney Matthews and his staff are very professional and personable. The process was explained thoroughly, and all questions were answered completely. I would definitely recommend Benjamin R. Matthews & Associates to anyone needing bankruptcy services." – LF