Oftentimes, when a person files for bankruptcy, they assume that they will lose most, if not all, of their assets. However, you may be relieved to know as a South Carolina resident that certain asset protection laws will likely allow you to keep many of your assets regardless of your debt.
If you find yourself in this unfortunate situation, it is in your best interest to reach out to our experienced bankruptcy attorneys in order to ensure the best possible outcome.
The Difference Between Chapter 13 and Chapter 7 Bankruptcy
Bankruptcy is a federal law that allows individuals and businesses to escape from their debt and in some situations, pay their creditors. Although there are a variety of types of bankruptcy, the most common are Chapter 13 and Chapter 7 bankruptcy.
In a Chapter 13 bankruptcy, your debt will be paid off in a debt adjustment plan. The individual filing bankruptcy will typically get to keep all of their property, but all of their disposable income will be given directly to the bankruptcy trustee who will then make payments to the creditors using the payment plan that has been approved by the court. The debts are often reduced based on the filer’s income and the payment plan usually lasts three to five years.
During a Chapter 7 bankruptcy, the filer’s assets may be liquidated except those that are considered necessary. In exchange for a discharge of the debt, the filer will turn over their non-exempt property to the trustee who will sell that property and pay off debts.
South Carolina Bankruptcy Exemptions
All states have their own rules about exemptions when a person files for Chapter 13 or Chapter 7 bankruptcy. These exemptions are the property that will be safe from bankruptcy and creditors. Normally, these exemptions include things like your home, vehicles, retirement accounts, and insurance policies. South Carolina laws require that a debtor use the exemptions that are laid out by the state laws. Exemptions must be claimed when a bankruptcy is filed, or you may be required to forfeit their protection.
Unsecured vs. Secured Debt
When it comes to debt there are two types: unsecured and secured. Unsecured debt is debt that isn’t secured with property. This may include medical bills, legal judgments, and credit card debt. Secured debt is debt that is secured by collateral such as your home.
It is important for you to understand that even property that secures debt is not always exempt from a creditor, even if it is listed as an exemption, because sometimes the person filing the bankruptcy has volunteered to use that property as security for a loan. Unsecured debt, however, will not be paid from exempt property.
Contact a South Carolina Bankruptcy Attorney
If you are thinking about filing bankruptcy and still have questions about whether your property will be exempt when you file, an experienced bankruptcy attorney can help you understand your rights and property. We will review your debts and assets and help you understand what your best course of action will be, what type of bankruptcy would be best for you, and what property you may be entitled to keep. Contact the attorneys at David Aylor Law Offices today to schedule a consultation.