Bankruptcy petitions generally take one of two forms: Chapter 7 (liquidation) or Chapter 13 (reorganization). For many, Chapter 7 is the simplest and easiest process to follow, although it still requires an understanding of the system and the legal requirements involved in order to avoid errors and lost exemptions.
Indeed, while Chapter 7 may require that consumers liquidate some of their property to pay creditors, it also erases some consumer debt (excluding spousal and child support payments, tax debts, and some student loans), giving the debtor breathing room to start again on better financial footing. While there are property exemptions designated in both federal and state laws, South Carolina requires residents to use state property exemptions.
How to Keep Your Car
State and federal exemptions differ in this area:
- Federal exemption – $3,225
- South Carolina state exemption – $5,000
However, keeping one’s car may not rest only in claiming the state exemption. If there is a vehicle loan secured by that vehicle, the debtor must continue to make their payments or face repossession.
How to Keep Your Home
- Federal homestead exemption - $20,200
- South Carolina state exemption – $50,000 of real property, personal property claimed as homestead, or co-op
While the state exemption protects the majority of homeowners in today’s market, they must also be sure to continue making mortgage payments to the lien holder on their property. While that mortgage may have been erased from their credit report, the lien holder still has the right to foreclose on the property if mortgage payments are not kept up to date.
South Carolina allows exemptions for other forms of personal property:
- Clothing, household goods, furnishings, appliances, books, musical instruments, animals and crops – up to $4,000 total
- Jewelry – up to $1,000
- Health aids
- Personal injury and wrongful death recovery required for support
- College investment trust funds
- Burial plot – up to $50,000 in lieu of homestead
- Cash and other liquid assets – up to $5,000 in lieu of homestead and burial plot
- Tools of the trade – tools, books, and implements of trade – up to $1,500 total
Filing Schedule C of a Bankruptcy Petition
Every consumer filing for Chapter 7 bankruptcy relief must include a completed Schedule C form detailing the property exemptions they are claiming. That form must contain the following details:
- The property being claimed
- The South Carolina statutes substantiating those property claims
- The property exemption value for each property claim
- Each property claim’s current assessed value (not the market value)
Getting Legal Help
While Chapter 7 is generally considered to be one of the most straightforward bankruptcy processes, it still requires a level of detail and legal understanding that most consumers do not have. With the help of a skilled bankruptcy attorney, these debtors can often find the most advantageous plan for their debt relief and claim the most exemptions to retain their personal property.
