What Will Happen to My Home and Car if I File for Bankruptcy?
In 2023, 452,990 people filed for bankruptcy in the United States. If you are facing financial hardship, filing for bankruptcy can offer you much-needed relief. Applying for bankruptcy can be overwhelming, with many people questioning if they can keep their home and car if they file.
In this article, our South Carolina bankruptcy attorneys discuss the different types of bankruptcy and what items may be protected when you file.
What Type of Bankruptcy Should I File?
If you are considering bankruptcy, you may be wondering what will happen to your home and vehicle. The truth is that many people keep their homes and cars when filing for either Chapter 7 or Chapter 13 bankruptcy.
Chapter 7 bankruptcy involves a liquidation of assets. In this type, you will be wiping the slate clean, selling your possessions, and using the proceeds to pay off creditors. Some people choose a Chapter 7 filing because it offers more immediate relief.
However, if you earn a regular income, then you may consider filing Chapter 13 bankruptcy. This form of bankruptcy is known as a wage earner’s plan, allowing an individual to repay their debt over time. Based on your income, you will be given a plan to repay your debt over a period of three to five years.
South Carolina Exemptions
Bankruptcy exemptions tell you what amount of property is protected. In a Chapter 7 filing, this details which property can be kept. In a Chapter 13 filing, it tells you how much you need to pay back to creditors. Even though bankruptcy cases go through federal court, if you are filing in South Carolina, you must use the state bankruptcy exemptions.
You do not have the option to use federal exemption limits, even if they work more in your favor.
South Carolina Code §15-41-30(A)(1)-(7) describes the property exemptions when filing bankruptcy, although these limits are adjusted every two years to account for inflation. The exemptions are based upon how much equity you have in the property.
As of June 2024, South Carolina bankruptcy exemptions are:
- Homestead: You can claim up to $67,100 in your home. A married couple filing joint bankruptcy can claim double the individual limit ($134,200). If you do not claim the homestead exemption, the exemption can be applied to a burial plot valued at $67,100.
- Motor vehicle: $6,700 individually in your vehicle, or $13,400 if filing jointly.
- Household furnishings: $5,375 individually or $10,750 jointly.
- Jewelry: $1,350 individually or $2,700 jointly.
- Cash and liquid assets (only if not using homestead exemption): $6,700 individually or $13,400 jointly.
- Professional books or tools of the trade: $2,025 individually or $4,050 jointly.
- Wildcard exemption (can be applied to any property you own): $6,700 individually or $13,400 jointly.
South Carolina Bankruptcy Attorneys Looking Out for You
Bankruptcy proceedings can be intimidating, requiring you to present your finances in court. If you are considering bankruptcy, now is the time to speak with our legal team. We can review your finances to determine which type of bankruptcy would work best for you. To schedule your free consultation, contact us online or by phone.
