What if My Chapter 7 Bankruptcy Case is Denied in South Carolina?
Case is Denied in South Carolina?
You may consider filing for Chapter 7 bankruptcy if you do not earn a regular income or you have qualifying debts, including credit card debt or medical bills. Chapter 7 allows you to wipe the slate clean, giving you a fresh start. Your case will be handled by a Chapter 7 trustee who will help liquidate your assets to pay back creditors.
However, it is possible to have your Chapter 7 case denied if you do not meet specific criteria. In this blog, our Columbia, SC, Chapter 7 bankruptcy lawyers discuss reasons that a Chapter 7 bankruptcy case may be denied and what legal options may be available to you.
Chapter 7 Means Test
If more than 50% of your debt is consumer debt, you must pass the means test to qualify for a Chapter 7 filing. This test compares your average monthly income to the state median income. As of April 1, 2025, the South Carolina median income levels are as follows:
- Family size 1 (single earner): $61,635
- Family size 2: $77,674
- Family size 3: $89,568
- Family size 4: $103,821
If your average monthly income is below the state median for the previous six months, then you will qualify under Chapter 7. If more than 50% of your debt is non-consumer debt (business debt), then you will automatically qualify without having to pass the means test. If your income is higher than the state median and 50% of your debt is consumer debt, then you will need to consider alternative debt relief options.
Reasons a Chapter 7 Filing May Be Denied
There are several reasons that a Chapter 7 case may be denied in South Carolina:
You Did Not Pass the Means Test
If your earnings over the past six months surpass the state median income, the bankruptcy court will deny your petition. However, you do have the option to apply for Chapter 13, as long as you have waited the required amount of time if you previously filed for bankruptcy. However, if your income has recently decreased, you can reapply for Chapter 7 later.
Your Debt Does Not Qualify for Discharge
The United States Bankruptcy Code classifies several debts as being ineligible for discharge, including alimony, child support, back taxes, criminal fines, debt obtained through fraudulent means, and, in most circumstances, student loan debt. If you are dealing with nondischargeable debt, the court can deny your Chapter 7 application.
Failure to Wait the Required Amount of Time Following a Discharge
If you previously filed for bankruptcy, you must wait a certain period of time before filing again. Specifically, you must wait eight years following a Chapter 7 discharge and six years following a Chapter 13 discharge.
Failure to Complete the Mandatory Credit Counseling or Education Course
Federal law requires that you complete mandatory credit counseling 180 days prior to filing for bankruptcy. Also, once you have filed your petition, you must also complete a debt education course. Failing to complete either will result in your Chapter 7 case being denied.
You Have Non-Exempt Property Which You Want to Keep
If you have a second vehicle or vacation home, this is considered non-exempt property, not protected by South Carolina’s statutory exemptions during bankruptcy. While this property can be sold to pay off your debts, if you refuse to liquidate these assets, your Chapter 7 case may be denied.
Debt Relief Alternatives
If your Chapter 7 filing is denied, you should be aware that you will still be responsible for paying off your debt. If your Chapter 7 petition was denied due to your income, you may consider restructuring your debt through a Chapter 13 plan or reaching a settlement with creditors. If your case was denied due to missing information or incorrect paperwork, you can file an appeal. If you believe that your Chapter 7 petition should have been approved, do not hesitate to contact our trusted legal team.
Speak with Our Columbia, SC, Bankruptcy Lawyers Today
If you are experiencing excessive debt, you may not know what steps can be taken to obtain relief. At Reed Law Firm, P.A., our Columbia, SC, bankruptcy attorneys can present you with manageable debt relief options. Let us help you achieve your financial and personal goals. To learn how our team of professionals can be of assistance to you, contact us online or by phone at 803-726-4888. We offer free consultations to prospective clients.
