Facing financial difficulties can be overwhelming. For some individuals in South Carolina, filing for bankruptcy becomes a viable option.
Understanding the fate of your personal assets during this process can inform your next steps.
Types of consumer bankruptcy
Individuals typically file for either Chapter 7 or Chapter 13 bankruptcy. Chapter 7 involves the liquidation of assets to pay off debts. Chapter 13 includes a structured repayment plan. The treatment of personal assets varies between these chapters.
Chapter 7 asset liquidation
In a Chapter 7 bankruptcy, the court may liquidate certain assets to satisfy creditors. However, South Carolina law provides exemptions to protect certain personal assets from liquidation.
Depending on the circumstances, you can potentially keep your primary residence. The median home value in South Carolina is $259,900. If you have equity in the property, you may need to use a portion to pay creditors.
The law exempts personal property like furniture, clothing and household goods. You can also retain retirement accounts such as 401(k) and IRA investments.
Chapter 13 asset protection
Chapter 13 bankruptcy creates a manageable debt repayment plan for debts. Unlike Chapter 7, it does not involve the liquidation of assets.
Individuals can retain their personal assets while adhering to the court-approved plan. It typically lasts three to five years. If you do not make payments as agreed under the plan, however, your creditors can move forward with repossessing your assets.
Individuals contemplating bankruptcy should thoroughly assess their financial situation. Understanding the exemptions and protections available under South Carolina law helps ensure you can safeguard your personal assets.