South Carolina Bankruptcy Law: Can You Keep Your Car?
When facing financial difficulties, many individuals in South Carolina may wonder how bankruptcy law will affect their ability to keep their car. Understanding the implications of filing for bankruptcy is crucial to protect your assets while working towards financial recovery.
South Carolina provides various bankruptcy options, primarily Chapter 7 and Chapter 13, which have different implications for vehicle ownership.
Chapter 7 Bankruptcy: Keeping Your Car
In Chapter 7 bankruptcy, also known as liquidation bankruptcy, your non-exempt assets may be sold to pay off your debts. However, South Carolina law allows for certain exemptions, which can help you keep your car if it meets specific criteria.
The key exemption for vehicles is the "wildcard" exemption, which allows you to protect up to $5,000 in equity. If the equity in your car is less than this amount, you can keep it without any issues. Equity is calculated as the car’s market value minus any outstanding loans or liens against it.
If your car is worth more than $5,000 in equity, you may still retain it by either paying the excess value to the bankruptcy estate or reaffirming the debt with the lender. Reaffirming means you agree to remain responsible for the car loan despite the bankruptcy, allowing you to keep the vehicle while repaying the debt.
Chapter 13 Bankruptcy: Keeping Your Car
Chapter 13 bankruptcy is a reorganization bankruptcy that allows you to keep your assets while creating a repayment plan for your debts over three to five years. This option is particularly beneficial if you wish to retain your car while managing your finances.
In Chapter 13, you can keep your car as long as you continue making the agreed-upon payments under your repayment plan. If you are behind on payments, a Chapter 13 filing can stop repossession and allow you to catch up on missed payments as part of the repayment process.
Additionally, your attorney may be able to negotiate the car’s loan terms or the amount owed during the bankruptcy process, potentially lowering your payments.
What to Consider Before Filing
Before filing for bankruptcy in South Carolina, consider the following:
- Car Value: Determine the market value of your vehicle and calculate your equity to understand what exemptions may apply.
- Loan Obligations: Assess your existing loan agreements to decide if reaffirming the loan is a viable option.
- Future Financial Stability: Evaluate your long-term financial goals and whether filing for bankruptcy aligns with them.
- Legal Advice: Consult with a bankruptcy attorney who specializes in South Carolina law to guide you through the process and ensure you make informed decisions.
In conclusion, under South Carolina bankruptcy law, it is possible to keep your car, but the approach you take will depend on whether you file for Chapter 7 or Chapter 13 bankruptcy. Remaining informed and seeking professional legal advice can help you navigate your bankruptcy journey while protecting your assets.