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Bankruptcy for South Carolina consumers: Which type is better?

Many South Carolina residents seeking a way out of overwhelming debt turn to the protection of the bankruptcy court. Filing for bankruptcy can help consumers dig out from staggering debt and, depending upon which type is filed, can also allow one to keep some of their property, including one's home and left-over income.

Understanding the different types of bankruptcy can allow a consumer to choose the option that most uniquely suits his or her current financial situation. There are two standard alternatives for individuals to consider: Chapter 7 and Chapter 13. However, there are important differences, and laws regarding bankruptcy vary somewhat from state to state.

Understanding each option can help consumers have a better bankruptcy experience. Chapter 7 is appropriate for those who generally have no assets and little to no money left after paying for basic living costs. Qualifying for Chapter 7 means that any property beyond a few statutory exemptions is liquidated. That property is sold and any proceeds distributed to creditors. Most remaining debt, with a few important exceptions, is discharged, meaning creditors can no longer pursue payment.

Chapter 13 is typically used by those who have assets they want to hang on to, including the roof over their head. A court-approved payment plan is established, allowing for the consumer to make up delinquent payments over a stated period of time -- normally up to five years. Chapter 13 also allows for some debts to either be completely discharged or modified.

However, some debts cannot be discharged in either type of bankruptcy. Most student loans and child support are included in this category. However, for South Carolina residents having trouble making ends meet, only worrying about student loans or child support is vastly more manageable than worrying about all of the other debts accumulated. For this reason, and because people usually end up with a fresh start, bankruptcy can often be more preferable than continuing to struggle every day with debts that have taken over a household.

Source: The Commercial Appeal, "Better Business: Before seeking bankruptcy, understand your options," Randy Hutchinson, July 7, 2012

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Reed Law Firm, P.A.
220 Stoneridge Drive,
Suite 301

Columbia, SC 29210

Phone: 803-726-4888
Fax: 803-726-4887
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Reed Law Firm, P.A.
1807 West Evans Street,
Suite B

Florence, SC 29501

Phone: 843-679-0077
Fax: 843-679-0667
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