Whether it be due to credit cards, student loans, or a medical emergency, you may be in over your head trying to pay off debt. In some cases, your best option may be to file for debt relief. Bankruptcy has given many people a new lease on life, freeing them from debt with the bonus of getting creditors off their backs.
At Reed Law Firm, P.A., we have assisted hundreds of clients residing in South Carolina in ridding themselves of the shackles that come with living with debt. Let us help you navigate your journey to financial peace.
What is Bankruptcy?
Bankruptcy is a way to reduce or eliminate certain debts. It is a way to give a debtor a fresh start, wiping the slate clean of past transgressions. With different types of bankruptcy options available, it is in your best interest to speak with a South Carolina bankruptcy attorney.
To begin bankruptcy proceedings, you will need to file a petition with the bankruptcy court. If you are filing for federal bankruptcy relief, this is handled in federal court. Individuals are eligible to file under chapter 7 or chapter 13.
Some debts, such as student loan debt, federal and state taxes, alimony, and child support, are nondischargeable. This means that these liabilities cannot be extinguished through bankruptcy. In this case, you may be able to arrange a payment plan with creditors.
Filing Bankruptcy: Chapter 7 versus Chapter 13
The specifics of your situation will determine if you should file for Chapter 7 or Chapter 13 bankruptcy.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is characterized by the liquidation of assets. A debtor’s nonexempt property (property that is not protected if you file for bankruptcy) will be sold, and the proceeds will be given to creditors to pay off debt.
Individuals, partnerships, corporations, and other business entities will qualify for a Chapter 7 filing. Eligibility is not contingent upon how much debt you have accumulated or if you have assets left over after paying off your debt.
While people believe that they will need to sell all their assets in a Chapter 7 filing, this is often not the case. In fact, many people are able to keep exempt property, such as their home, vehicle, and other household goods, in undergoing Chapter 7 bankruptcy.
Chapter 13 Bankruptcy
If you earn a regular income, you may qualify for Chapter 13 bankruptcy. Coined a wage earner’s plan, it is essentially a repayment plan for individuals. Debtors are given between three to five years to pay off a portion of their debt, with the timeline calculated based on their income. The bonus? Debtors can save their homes from foreclosure in this type of bankruptcy.
Individuals who are self-employed and operating an unincorporated business will qualify for Chapter 13 bankruptcy. To qualify for Chapter 13, individuals must have less than $2.75 million in unsecured debt (debt that is not backed by collateral, such as credit card charges) and secured debt (debt that is backed by collateral, such as a car loan or your home) combined.
You will not get to choose the order in which creditors are paid off. This will be up to the Chapter 13 trustee, who will likely pay secured debts first, followed by priority unsecured debts (like alimony or child support), and finally, unsecured debts last.
Speak with our South Carolina Bankruptcy Attorneys Today
Debt can be all-consuming, making you feel like you are unable to breathe. At Reed Law Firm, P.C., our bankruptcy attorneys understand that you are going through an incredibly stressful time. If you are ready to improve your financial situation, reach out to our South Carolina bankruptcy attorneys today. To schedule your free consultation, contact us by phone or by completing our online contact form.
