If you are facing financial difficulties and are unsure as to how you should proceed, what type of bankruptcy you should file and how the different types of debts will be treated when you file for bankruptcy, you need to talk to a South Carolina bankruptcy attorney. There can be situations where borrowers are harassed by lenders. There are also situations where the borrower is constantly under pressure of losing their home, car or any other asset. This situation can be fairly stressful, but you should know that it is not too late to get your financial affairs in order. If you feel that you cannot handle payments of your debt without intervention, you can consider bankruptcy, but before you make any final decision, speak to a bankruptcy attorney in South Carolina to determine the best course of action.
What is Debt?
There are primarily two types of debt:
Secured debt is debt that is backed by some form of collateral. This collateral is there to reduce the risk that may be associated with the loan. A very common example of a secured debt is a mortgage or an auto loan. In case the borrower defaults on the payment, the bank can simply seize the property, sell it, and use the money to recover the loan.
Unsecured debt is one where the lender does not have any rights to any collateral. In case the borrower defaults on payments, the lender cannot take control of any assets against that debt. They can, however, take other actions, such as hire a debt collector, sue the borrower and take them to court, etc. They can also report them to the credit bureau and this can have a negative impact on the credit rating of the borrower. The most common example of unsecured debt is credit card debt. Other types of unsecured debt include medical bills, court-ordered child support, student loans, and payday loans.
South Carolina Bankruptcy Laws
When we talk about bankruptcy, it is important to understand that each type of debt is treated differently depending on the type of bankruptcy.
Chapter 7 bankruptcy is one where the court appoints a trustee and the trustee takes your assets, sells them and distributes the money to your creditors. Chapter 7 bankruptcy is the most common type of bankruptcy. It is also known as straight bankruptcy or liquidation bankruptcy. If you have filed for Chapter 7 bankruptcy, all your unsecured debt can be discharged. This means that you will no longer have any obligation to pay that debt. But in Chapter 7 bankruptcy, secured debt is treated in a different manner. You may be able to get out of paying that debt, but the creditor may still retain the right to repossess the collateral.
Chapter 13 bankruptcy is one where the debtor is required to make a monthly payment to a Chapter 13 Trustee for a period of 36 to 60 months. The money collected by the Trustee is then distributed to the creditors. If you have filed Chapter 13 bankruptcy, you can discharge all your unsecured debts. As far as secured debt is concerned, you have more chances of being able to retain your collateral with Chapter 13 bankruptcy as compared to Chapter 7 bankruptcy. Under the Chapter 13 bankruptcy regulations, the borrower has three to five years to catch up on any payments that they may have missed on their secured debt. The creditors are not allowed to take the collateral as long as the borrower is making a payment towards the outstanding amount regularly. In the three to five years’ time period, there is a very high probability that the borrower will be up-to-date on payments of their secured debt.
Consult with a South Carolina Bankruptcy Attorney Today
If you’re looking for a bankruptcy attorney, you can contact us at David Aylor Law Offices. We have been serving the Charleston and Myrtle Beach areas for many years. If you have financial affairs that need to be managed, get in touch with an experienced bankruptcy attorney in Myrtle Beach or Charleston, SC to find out what we can do for you and how we can help you get back on track. Financial problems can be very stressful for families and we understand the pressure you must be under to make ends meet. Filing for bankruptcy is a difficult decision, but in certain circumstances it could be your best possible option. Call us today at (843) 310-4900 and speak with our bankruptcy attorney in South Carolina.