Charleston Bankruptcy Lawyers

Frequently asked questions about filing for bankruptcy in South Carolina

1. What is Bankruptcy?
   Bankruptcy is a means for people who owe more money than they can pay, to either work out a plan to repay the money over time, under Chapter 13, or for most of the bills to be wiped out, under chapter 7. Once the bankruptcy petition is filed, creditors must stop all collection efforts against the debtor.
2. Who may file for Bankruptcy?
   Any person may file for bankruptcy. If you are married, you may file a single petition or jointly with your spouse.
3. What are the different "chapters" in bankruptcy?
   Chapter 7 is the liquidation chapter of the Bankruptcy Code. Under chapter 7, a trustee is appointed to collect and sell all property that is not exempt and to use any proceeds to pay creditors. In the case of an individual, the debtor is allowed to claim certain property exempt. In exchange for this, the debtor gets a discharge, which means that the debtor does not have to pay certain types of debts.
   Chapter 13 is the debt repayment chapter for individuals with regular income whose debts do not exceed $1,230,650 ($307,675 in unsecured debts and $922,975 in secured debts), including individuals who operate businesses as sole proprietorships. Chapter 13 generally permits individuals to keep their property by repaying creditors out of their future income. Each chapter 13 debtor proposes a repayment plan which must be approved by the court. The amounts set forth in the plan must be paid to the chapter 13 trustee who distributes the funds for a small fee. Many debts that cannot be discharged can still be paid over time in a chapter 13 plan. After completion of payments under the plan, chapter 13 debtors receive a discharge of most debts.
4. What are exemptions?
   11 U.S.C. § 522(b) allows an individual debtor to exempt real, personal, or intangible property from the property of the estate. Exempt assets are protected by state law from distribution to your creditors. Typically, exempt assets include vehicles up to a certain dollar amount, the equity in your home up to a certain amount, and tools of the trade.
   In South Carolina, the debtor may exempt the following (list not exhaustive):
   

   a) Up to $50,000 in equity in the debtor’s primary residence;
   b) Up to $5,000 in one motor vehicle;
   c) Up to $4,000 in household furnishings and goods
   d) Up to $1,000 in personal jewelry;
   e) Up to $1,500 in tools of the trade, professional books, etc;
   f) Any unmatured life insurance contract owned by the debtor;
   g) The debtor’s right to receive social security benefits, unemployment compensation, veteran’s benefit, alimony, etc.;

   
   Deciding which assets are exempt and how and if you can protect these assets from your creditors can be one of the more important and difficult aspects of your bankruptcy case. It is extremely important to consult an attorney if you have any questions regarding the issue of exempt assets.
5. What are the current filing fees for the bankruptcy petition?
   The filing fee for chapter 7 is currently $299.
   The filing fee for chapter 13 is currently $274.
6. What happens after I file bankruptcy?
   In most circumstances, upon filing the petition, the "automatic stay" immediately takes effect and prohibits all creditors from taking any collection action against the debtor or the debtor's property. Although the stay is automatic, creditors need to be advised of the stay. Using the creditor matrix provided by the debtor, the court issues a notice to all creditors advising them of the filing of the bankruptcy, the case number, the automatic stay, the name of the trustee assigned to the case (if filed under chapter 7 or 13), the date set for the meeting of creditors, the deadline, if any, set for filing objections to the discharge of the debtor and/or the dischargeability of specific debts, and whether and where to file claims.
   In a chapter 7 case involving an individual debtor, the creditors generally have sixty (60) days from the first date set for the meeting of creditors to object to the discharge of the debtor and/or the dischargeability of a specific debt. If the deadline passes without any objections to the debtor's discharge being filed, the court will issue the discharge order. If any objections to the dischargeability of specific debts are filed, they will be heard by the court, but will not delay the granting of a discharge with respect to other debts. An objection to discharge or to the dischargeability of certain debts is considered a separate lawsuit (an adversary proceeding) within the bankruptcy and may result in a trial before the judge assigned to the case. If there are no assets from which creditors can be paid, the trustee will prepare a report of no distribution and the case will be closed. If there are assets that are not exempt, funds will be available for distribution to creditors. The court will set claims deadlines and notify all creditors to file their claims. The trustee will proceed to collect the assets, liquidate them and distribute the proceeds to creditors. When the assets have been completely administered, the court will close the case.
   In a chapter 13 case, creditors are given an opportunity to object to the plan. If no objection is filed by creditors or the trustee, the plan may be confirmed as filed. Once the plan is confirmed, the trustee will distribute the proceeds of the debtor's plan payments to creditors until the debtor completes the plan or the court dismisses or converts the case. Upon completion of the chapter 13 plan, the court will issue a discharge order, the trustee will prepare a final report, and the case will be closed.
7. What is a discharge?
   The discharge order is issued by the court and permanently prohibits creditors from taking action to collect dischargeable debts against the debtor personally; this does not prevent secured creditors from seizing collateral if payments are not kept up, or other creditors from pursuing property of the estate.
8. How many years will a bankruptcy show on my credit report?
   The fact that an individual filed a bankruptcy can remain on the credit report no longer than 10 years under provisions of the Fair Credit Reporting Act. If a chapter 13 bankruptcy is successfully completed, the credit reporting industry retains the information for only seven years rather than the ten years allowed by law, according to the Associated Credit Bureaus, Inc. The decision whether to grant you credit in the future is strictly up to the creditor and varies from creditor to creditor depending on the type of credit requested. There is no law which prevents anyone from extending credit to you immediately after the filing of a bankruptcy nor will a creditor be required to extend credit to you.