Because of pervasive social stigma, many people in South Carolina tend to put off filing for bankruptcy at all costs. However, putting off dealing with insurmountable debt only exacerbates the problem. Bankruptcy can be an incredibly useful tool for people who have no way of digging themselves out of debt alone, and many find that Chapter 13 strikes the right medium for handling their debt.
Unlike Chapter 7, which liquidates debt, Chapter 13 bankruptcy is a type of repayment plan. While total liquidation of unsecured debts might sound preferable, Chapter 13 has many benefits, including the ability to stop foreclosures in their tracks. Refiling rules are also less strict with Chapter 13. It’s possible after four years, whereas Chapter 7 requires eight years from a past bankruptcy. However, these time limits do not apply if a person’s bankruptcy was dismissed without any discharge of debt.
Chapter 13 consolidates a person’s debt into a regular payment based on his or her income. Payment plans, which must be proposed by the filer and approved by the court, generally last between three and five years, with the latter being the norm for most people. Upon completion of the payment plan, remaining unsecured debt is successfully discharged, giving that individual a fresh financial start for the future. Timely payment is important for this type of bankruptcy, though, as failure to do so can lead to a dismissal, which will not result in any debts being discharged.
Virtually no one intends to become buried in personal debt, but life happens — someone might become ill, lose a job or face any number of unexpected financial disasters. Chapter 13 bankruptcy can be an effective way to handle devastating amounts of debt, put an end to harassing creditors and even stop foreclosure. More importantly, successful bankruptcies give individuals in South Carolina a fresh financial start.
Source: Mother Jones, “Too Much Debt? How to Make a Smart Decision About Filing for Bankruptcy”, Paul Kiel, Sept. 28, 2017