What Happens to Your Credit Card Debt in South Carolina Bankruptcy?

Filing for bankruptcy is a significant decision that can have a profound impact on your financial situation, especially when it comes to credit card debt. In South Carolina, understanding how bankruptcy affects your credit card obligations can help you make informed choices about your financial future.

When you file for bankruptcy in South Carolina, you typically choose between two primary types: Chapter 7 and Chapter 13. Each type has distinct implications for your credit card debt.

Chapter 7 Bankruptcy: This is often referred to as a "liquidation" bankruptcy. In this scenario, most credit card debts are usually discharged, meaning you are no longer legally obligated to pay them. To qualify for Chapter 7, individuals must pass a means test, which assesses their income and expenses. If you qualify, the process can be relatively swift, typically lasting just a few months. However, not all debts are dischargeable. For example, if the credit card debt was incurred through fraud or for luxury goods shortly before filing, you may still be responsible for these balances.

Chapter 13 Bankruptcy: This type is often called a "reorganization" bankruptcy. In this case, instead of discharging your debts outright, you create a repayment plan to pay back a portion of your debts over a period of three to five years. Under Chapter 13, credit card debt can be included in the repayment plan, often at a reduced amount. Successful completion of this plan can lead to the discharge of unsecured debts that were not paid in full during the repayment period.

It's important to note that while bankruptcy can provide relief from credit card debt, it also has a significant impact on your credit score. Filing for bankruptcy stays on your credit report for ten years, affecting your ability to obtain new credit in the future.

Exemptions in South Carolina: South Carolina has its own set of exemptions that can protect some of your assets during bankruptcy. For instance, you can exempt certain amounts of equity in your home, vehicle, and personal belongings. This means that filing for bankruptcy doesn't necessarily mean you will lose everything; many people retain essential assets even when discharging credit card debt.

Seeking Professional Help: Navigating the bankruptcy process can be complicated. It's advisable to consult with a qualified bankruptcy attorney in South Carolina who can guide you through the process, help you understand your options, and ensure that you make the best decision based on your financial situation.

In summary, bankruptcy can provide a lifeline for those struggling with credit card debt in South Carolina. Whether through Chapter 7 or Chapter 13, individuals can find relief and a pathway to financial recovery. Understanding the processes and implications involved in bankruptcy is crucial to making informed financial decisions that can lead to a more stable future.