South Carolina residents who are struggling to cope with an unmanageable financial situation can seek relief from overwhelming debt by filing a Chapter 7 or Chapter 13 bankruptcy petition. Those who wish to file for Chapter 7 must pass a means test, which can be difficult if they earn more than the state median income. Chapter 13 petitioners make payments to pay down their debt over a period of three to five years.
Mortgages, car loans, medical bills and credit card balances can be discharged by either Chapter 7 or Chapter 13 bankruptcies. However, creditors may take possession of property like real estate or automobiles secured by these debts. To retain this property, petitioners can take advantage of certain legal exceptions or include the loans in a Chapter 13 payment plan. South Carolina has bankruptcy exemptions in place for assets including cars, homes, work tools and retirement accounts. The state also has a wildcard exemption that can be used to protect property that would otherwise not be covered.
Debts that cannot usually be discharged by filing a personal bankruptcy include student loans, unpaid taxes, child support and alimony. However, these rules are not absolute. Debts generally considered nondischargeable may be discharged if petitioners can prove that making the required payments would not leave them with enough money to maintain even a minimum standard of living. They must also show that they have made a good faith effort to pay these debts.
Taking action to escape crushing debt can be daunting because bankruptcy is surrounded by so many myths and misunderstandings. Attorneys with debt relief experience could put these misconceptions to rest and explain that these laws were written to offer second chances and not punish individuals for making poor decisions. Attorneys could also point out that creditors are ordered to cease all collection efforts when either a Chapter 7 or Chapter 13 petition is filed.