Filing for Bankruptcy in South Carolina: A Complete Guide
Filing for bankruptcy is never an easy decision, but for many individuals and businesses in South Carolina, it can offer a path to financial relief and a fresh start. Whether you’re overwhelmed by credit card debt, medical bills, or a failing business, understanding how filing for bankruptcy in south carolina can help you make informed decisions about your financial future.
In this blog, we’ll break down the essentials of filing for bankruptcy in South Carolina, the types available, eligibility criteria, and what to expect from the process.
What Is Bankruptcy?
Bankruptcy is a legal process designed to help people and businesses eliminate or repay their debts under the protection of the federal bankruptcy court. It is governed by federal law, but each state, including South Carolina, has its own set of exemptions that affect what property you can keep.
The goal of bankruptcy is to give honest debtors a clean slate, either by discharging debts completely or by creating a manageable repayment plan.
Types of Bankruptcy in South Carolina
The most common types of bankruptcy for individuals and small business owners are Chapter 7 and Chapter 13. Here’s how they differ:
Chapter 7 – Liquidation Bankruptcy
Chapter 7 is best suited for individuals with limited income who cannot pay back their debts. When you file Chapter 7, a trustee may liquidate (sell) your non-exempt assets to repay creditors. However, many people can keep most or all of their property due to exemption laws.
Key Features:
- Fast process (typically 3-6 months)
- Most unsecured debts (like credit cards and medical bills) are discharged
- You must pass a Means Test to qualify
Chapter 13 – Reorganization Bankruptcy
Chapter 13 is for people with regular income who can repay part or all of their debts over a period of 3 to 5 years. It allows you to keep your property while catching up on past-due payments through a court-approved repayment plan.
Key Features:
- Ideal for homeowners trying to stop foreclosure
- Protects valuable non-exempt property
- Requires a structured repayment plan
South Carolina Bankruptcy Exemptions
South Carolina does not use federal bankruptcy exemptions. Instead, it has its own set of state-specific exemptions to protect certain assets from being seized in a bankruptcy.
Some important exemptions include:
- Homestead Exemption: Up to $63,250 of equity in your primary residence (doubled for married couples)
- Motor Vehicle Exemption: Up to $6,325 in equity in one vehicle
- Personal Property: Includes clothing, appliances, furniture, and up to $1,275 in cash
- Wages and Pensions: Most retirement accounts and up to 75% of earned but unpaid wages are protected
Exemptions play a crucial role in determining what assets you can keep after filing bankruptcy.
Steps to File for Bankruptcy in South Carolina
Filing for bankruptcy in South Carolina involves several steps:
1. Credit Counseling
Before you can file, you must complete a credit counseling course from an approved agency within 180 days before filing.
2. Gather Documentation
You’ll need to provide:
- Tax returns
- Pay stubs and income statements
- Asset lists
- Debt and creditor information
- Monthly expenses
3. File Bankruptcy Forms
Complete and file the appropriate bankruptcy forms with the U.S. Bankruptcy Court for the District of South Carolina. Filing fees range from $313 (Chapter 13) to $338 (Chapter 7), though fee waivers or payment plans may be available.
4. Automatic Stay Begins
Once you file, an “automatic stay” goes into effect, halting all collection efforts, lawsuits, garnishments, and foreclosures.
5. Trustee Meeting (341 Meeting)
You’ll attend a meeting with the bankruptcy trustee, where you answer questions under oath about your financial situation. Creditors may also attend.
6. Debtor Education Course
You must complete a debtor education course before receiving a discharge.
7. Discharge or Plan Confirmation
- In Chapter 7, your qualifying debts are discharged after liquidation.
- In Chapter 13, your repayment plan begins, and qualifying debts are discharged upon completion of payments.
Impact on Your Credit
Filing for can you file bankruptcy 3 times will impact your credit score. Chapter 7 remains on your credit report for 10 years, while Chapter 13 stays for 7 years. However, many people find that their credit begins to recover quickly after filing, as they are no longer burdened by unmanageable debt.
Bankruptcy also provides an opportunity to rebuild your credit with responsible use of secured credit cards, timely bill payments, and budgeting.
Do You Need a Bankruptcy Attorney?
Although it’s possible to file for bankruptcy without a lawyer (pro se), it is generally not recommended—especially if your case is complex. An experienced South Carolina bankruptcy attorney can:
- Help you choose the right chapter
- Ensure your paperwork is correctly filed
- Represent you in court
- Maximize the exemptions you’re entitled to
The investment in legal support often pays off through better outcomes and reduced risk of case dismissal.
Bankruptcy Alternatives
Before filing, consider whether there are other options that might work for your situation:
- Debt settlement or negotiation
- Debt consolidation loans
- Credit counseling
- Budgeting and financial coaching
These alternatives may help if your debt load is manageable and you’re not facing immediate foreclosure or lawsuits.
Final Thoughts
Filing for bankruptcy in South Carolina is a serious decision, but it can also be the first step toward regaining control of your finances and building a more stable future. Whether you’re considering Chapter 7 to wipe out debt or Chapter 13 to protect your assets while repaying creditors, understanding the process and your rights under South Carolina law is essential.
Before you take action, speak with a qualified bankruptcy attorney in your area to ensure you’re making the best choice for your circumstances. With the right guidance, bankruptcy can be the fresh start you need to break free from debt and begin a new financial chapter.