What happens when I file for bankruptcy? Will it ruin my credit forever? How do I stop all these calls from creditors? Will I ever be able to get rid of this debt? Will I lose everything? These may be just a few of the questions you encounter when deciding whether bankruptcy is right for you. As the economy continues to struggle, many Americans, including those in South Carolina, have sought refuge from mounting credit card, medical and other debt by filing for bankruptcy.
So What is Bankruptcy Exactly?
Bankruptcy is a process where individuals, families and businesses have a chance to start over by either eliminating or reorganizing their debt. There are three main types of bankruptcy, Chapter 7, Chapter 11, and Chapter 13. Most families and individuals file under a Chapter 7 bankruptcy, as this allows them to discharge most of their debts.
There are some debts that are non-dischargeable. While nearly all credit card debt and secured loans (such as a home or vehicle loans) can be discharged, the following list describes some debt that a bankruptcy will not forgive or discharge:
- Child support payments
- School loans
- Fines or penalties given by the government
- Debts resulting from a crime (such as embezzlement, closed lawsuits, or personal injury cases)
- Alimony payments
If you are unsure what type of loan you have (secured or unsecured) or if you are able to discharge your debt with a bankrutpcy, contact a South Carolina bankruptcy attorney.
Will it Ruin My Credit Forever?
A bankruptcy will not ruin your credit forever. The purpose of a bankruptcy is to allow debtors to start over. However, your credit will initially lower 50-75 points after you file. Many South Carolina residents have been able to take out loans right after filing. Your credit will start rebuilding in as little as six months after you file. It’s important to keep your credit history clean after you file by paying your bills on time.
How Do I Stop These Calls?
Creditor calls, garnishments, judgments and other harassing incidents will all stop once you file for bankruptcy. Before you file for a Chapter 7 bankruptcy, South Carolina residents must meet the state and federal requirements.
There are two ways the government determines whether an individual or family qualifies for a Chapter 7. The first method involves measuring a family’s income.
A debtor must fall at or below the median income level for the state they reside in. For residents living in South Carolina the following list shows the income level a debtor must be at in order to file. Note that the income level for every state can change from year to year.
- Single individual — $37,055
- Family of 2 — $50,500
- Family of 3 — $52, 738
- Family of 4 — $63,074
- Additional family members — Add $7,500 for each person living in the household to determine your income level.
If your income level is higher than the average level for South Carolina you still may qualify for a bankruptcy. This is determined with the means test. In 2005, the federal government instituted the Reform Act for all individuals and businesses who wish to file bankruptcy. In this Act, the means test was instituted to help determine if debtors qualify for Chapter 7 bankruptcy. If you are over the median income level, additional financial information may be needed to pass the means test, which is a series of calculations, proving that a Chapter 7 bankruptcy is the best option for you.
Will I Get Rid of My Debt?
You will get rid of nearly all unsecured debt. That includes medical bills, credit cards, personal loans, and collections debt. Secured debt (that has collateral attached to it) may also be discharged; however, you may be required to give up the collateral. Your South Carolina bankruptcy attorney will counsel you with the best course of action regarding your secured debt.
Will I Lose Everything?
No, you definitely will not lose everything. In fact, federal and state law have mandated a certain amount of property and assets to remain exempt (or free from) bankruptcy. According to bankruptcy law in South Carolina, the only laws that apply are state and not federal exemption laws.
Residents who file in South Carolina may keep the following:
- Homestead – Up to $53,375 in value for a single owner. Double the amount for more than one owner.
- Personal Property
- Clothing and Household Goods – No More than $4,275
- Jewelry – Up To $1,075
- Burial Plot – Up To $50,000 in value. Can only be used instead of home exemption.
- Motor Vehicle – Any single vehicle worth $5,350 or less.
- State Retirement System Benefits – 100%
- General Assembly Retirement Benefits – 100%
- Peace Officer’s Benefits – 100%
- Fraternal Benefit Association Benefits – 100%
- Social Security Benefits – 100%
- Workmen’s Compensation – 100%
- Any Public Aid and/or Assistance – 100%
- Unemployment Compensation – 100%
- Veterans Benefits – 100%
- Pensions and Insurance
- Group Life Insurance Policy Proceeds – 100%
- Accidental Disability – 100%
- ERISA-Qualified Pension Plan AND ERISA Benefits – 100%
- Railroad Unemployment Insurance – 100%
- Tools of Trade – Up to $1,500. This includes machines, books, and other implements.
Get answers to your debt problems today. Contact a South Carolina bankruptcy attorney as soon as possible in order to avoid problems dealing with collection agencies, repossessions, or worse. A Chapter 7 bankruptcy can resolve your financial problems in a short amount of time.
South Carolina Bankruptcy Courts
J. Bratton Davis United States Courthouse
1100 Laurel Street
Columbia, South Carolina 29201
Phone: (803) 765-5436
King and Queen Street Building
145 King Street, 2nd Floor
Charleston, South Carolina 29401
Phone: (843) 727-4112
Donald S. Russell Federal Courthouse
201 Magnolia Street, 1st Floor
Spartanburg, South Carolina 29306
Phone: (864) 591-5315