How to Qualify for Bankruptcy in South Carolina

How to Qualify for Bankruptcy in South Carolina

Bankruptcy can offer a fresh start for individuals struggling with overwhelming debt. In South Carolina, the process of qualifying for bankruptcy involves meeting specific criteria and understanding the different types available. This article outlines the key steps and requirements to help you determine if you qualify for bankruptcy in South Carolina.

Types of Bankruptcy in South Carolina

In South Carolina, individuals typically file either Chapter 7 or Chapter 13 bankruptcy:

  • Chapter 7 Bankruptcy: This is a liquidation bankruptcy, where non-exempt assets are sold to pay creditors. Most unsecured debts can be discharged, providing a clean slate.
  • Chapter 13 Bankruptcy: This type involves creating a repayment plan to pay back some or all of your debts over three to five years. It is often suited for individuals with regular income who wish to retain their assets.

Qualifying for Chapter 7 Bankruptcy

To qualify for Chapter 7 bankruptcy, you must pass the means test, which compares your income to the median income for households in South Carolina. Here are the qualifications:

  • Your average monthly income over the last six months should be less than the median income for your household size in South Carolina.
  • If your income exceeds the median, you can still qualify if you can demonstrate that your disposable income is low enough after accounting for necessary living expenses.

You will also need to complete credit counseling from an approved agency within 180 days before filing for bankruptcy. This step ensures that you explore all options before proceeding with Chapter 7.

Qualifying for Chapter 13 Bankruptcy

For Chapter 13 bankruptcy, the requirements differ slightly:

  • You must have a regular source of income, which can include wages, self-employment income, or other steady income sources.
  • Your unsecured debts must be less than $419,275 and secured debts must be less than $1,257,850, as of April 2023.
  • You must complete credit counseling from an approved agency within 180 days before filing.

The repayment plan you propose must be feasible, and the court will review it to ensure it meets the requirements and is fair to creditors.

Filing for Bankruptcy

To file for bankruptcy in South Carolina, you must complete several forms, including:

  • The bankruptcy petition
  • The schedules of assets and liabilities
  • A statement of financial affairs

Once you have completed the necessary documents, you will file them with the bankruptcy court in your district. The filing fee must also be paid unless you qualify for a fee waiver.

Bankruptcy Alternatives

Before deciding on bankruptcy, consider exploring alternatives such as debt consolidation, negotiation with creditors, or credit counseling services. These options can sometimes provide relief without the long-term impact of bankruptcy on your credit report.

Conclusion

Qualifying for bankruptcy in South Carolina requires understanding your financial situation and knowing the specific requirements for Chapter 7 or Chapter 13. Be sure to seek guidance from a qualified bankruptcy attorney to navigate the process effectively and ensure your rights are protected.

Remember, bankruptcy can significantly impact your financial future, but it can also provide the opportunity to rebuild your credit and regain control over your finances.