A South Carolina bankruptcy attorney explains
Filing for bankruptcy can be one of the most difficult decisions in a person’s life. Many people considering declaring bankruptcy have a lot of questions. And right near the top of the list is what property they can keep if they file for bankruptcy and which property creditors can take away during the bankruptcy process.
Bankrate recently published an article about this complex topic. But this article only deals with some of the questions that often come up about property rights when businesses or individuals file for bankruptcy.
Each state has different bankruptcy laws, including South Carolina. What type of bankruptcy you file for – often Chapter 7 or Chapter 13 – can make a big difference. Certain debts, including most student loan payments and child support, also often cannot be discharged (excused) when filing for bankruptcy. That’s why it’s important to talk with an experienced South Carolina bankruptcy lawyer or an attorney in your state who fully understands the bankruptcy process.
What property can creditors take?
There are so many different rules concerning what you cannot keep when filing for bankruptcy and what property creditors can seize during the bankruptcy process. In general, this includes:
- When the person declaring bankruptcy bought or sold certain property. For example, if certain property was sold, transferred or given away two to four years before filing for bankruptcy and the person declaring bankruptcy did not receive a “reasonably equivalent value” in payment, creditors may be able to seize such property, according to Bankrate.
- Property or assets that someone receives after filing for bankruptcy. According to Bankrate, this can include:
- Money or property inherited after filing for bankruptcy.
- Divorce settlement within 180 days of filing for bankruptcy.
- Tax refund received after filing for bankruptcy.
- Money (over $600) paid to a creditor up to 90 days before declaring bankruptcy.
- Money (over $600) paid or given to a friend or relative up to one year before declaring bankruptcy.
In each case, creditors may be able to seize these assets. But before creditors take such assets, anyone who has filed for bankruptcy or is considering doing so should talk to an attorney right away. As explained, the rules vary widely from one state to another. Some states even allow individuals declaring bankruptcy to choose their state’s bankruptcy laws or federal bankruptcy laws when seeking bankruptcy protection.
Property you can keep when filing for bankruptcy
Again, the rules vary from state to state and which type of bankruptcy an individual files for when it comes to which assets individuals can keep when declaring bankruptcy. But in many cases, people can often keep the following property when filing for bankruptcy:
- House or primary dwelling. This is often due to what’s called the “homestead exemption.”
- Primary vehicle in many cases. However, you may have to surrender your vehicle in certain circumstances, including if you are behind on your car payments, according to Bankrate. In such cases, the company that issued your car loan may be able to repossess your car.
- Social Security benefits received by the person declaring bankruptcy.
- Unemployment benefits.
- Veterans’ benefits.
- Alimony payments or child support up to a reasonable amount.
- Jewelry up to $1,700 in most cases, due to the federal personal property exemption.
These are just some of the items you may be able to keep when filing for bankruptcy. However, don’t simply assume that you can or cannot keep certain property when filing for bankruptcy. Talk with an experienced attorney who can advise you on the best course of action.
Does it matter what type of bankruptcy I file for?
Yes. Different types of bankruptcy present different opportunities and challenges. This is especially true with the two most common types of bankruptcy – Chapter 7 and Chapter 13. There are distinct differences and advantages to Chapter 7 bankruptcy versus Chapter 13 bankruptcy.
As far as which assets you can keep, Chapter 7 bankruptcy, in general, allows individuals to keep their home, car and certain other property. Chapter 7 bankruptcy also allows individual consumers to eliminate most unsecured debt (including most medical debt and credit card debt) and keep certain assets if a U.S. Bankruptcy Court issues a “Discharge of Debt.”
Individuals who file for Chapter 13 bankruptcy can often keep their home and car along with most other assets. However, there are many big differences between both types of bankruptcy. Chapter 7 bankruptcy has strict income limits, for example. And when filing for Chapter 13 bankruptcy, all debts must often be paid in full in most cases.
What are the bankruptcy laws in South Carolina?
There are many distinct differences between the bankruptcy laws in South Carolina and many other states. Some of the bankruptcy rules and regulations that apply in South Carolina are federal bankruptcy laws. But there are exceptions, including which bankruptcy exemptions apply in South Carolina.
Unlike some states, individuals applying for bankruptcy in South Carolina must use the state’s exemptions. Individuals cannot choose between the state or federal exemptions when filing for bankruptcy in South Carolina. Such exemptions in South Carolina include:
- South Carolina homestead exemption – A certain amount of equity in your home is protected and cannot be seized by creditors, according to South Carolina Code of Law (§ 15-41-30(A)(1)).
- South Carolina personal property exemption – This includes certain clothing, furniture, appliances and books up to a certain amount. Such assets cannot be seized by creditors, according to South Carolina Code of Law (§§ 15-41-30(A)(1)-(8)).
- South Carolina motor vehicle exemption – This is due to South Carolina Code of Law (§ 15-41-30(A)(2)).
- South Carolina veteran's benefits exemption – This is due to South Carolina Code of Law (§ 15-41-30(A)(11)).
- South Carolina workers' compensation exemption – This is due to South Carolina Code of Law (§ 42-9-360).
- South Carolina life insurance exemption – This applies to insurance benefits awarded to someone due to an illness, accident or disability. Such assets up to a certain amount cannot be seized, according to South Carolina Code of Law (§ 15-41-30(A)(11), § 38-63-40(D)).
- South Carolina pension fund exemption – This is due to South Carolina Code of Law (§ 5-41-30(10)(E),(14)).
- South Carolina college investment exemption – This is due to South Carolina Code of Law (§ 59-2-140).
- South Carolina Wildcard Exemption – Certain assets not covered by other exemptions, according to South Carolina Code of Law (§ 15-41-30(A)(7)).
These are just some of the rules and regulations that apply in bankruptcy cases in South Carolina. Depending on your specific financial situation, other state and federal laws may apply. That’s why it’s critical that you consult with an experienced South Carolina bankruptcy attorney if you’re considering filing for bankruptcy for any reason.
How a bankruptcy lawyer can help you
Don’t simply assume you can or cannot keep certain property if you file for bankruptcy in South Carolina. What might seem straightforward can often be much more complicated depending on a wide range of factors, including the value of your assets and other financial considerations.
Our experienced bankruptcy lawyers at Benjamin R. Matthews and Associates, LLC in South Carolina can work with you and help you understand which property you can keep depending on what type of bankruptcy you file for in South Carolina. We thoroughly understand the rules and regulations that apply to bankruptcy in our state. That’s because we have been helping people through this complex process for decades.
Learn more about how we can help if you’re considering filing for bankruptcy in South Carolina. Contact us and schedule an appointment at our law firm. We have two offices conveniently located in Columbia and Rock Hill, South Carolina, and we handle cases statewide.