How Does Filing for Bankruptcy in South Carolina Affect Future Loan Eligibility?

What Are the Different Types of Bankruptcy You May Consider?

Before you file for bankruptcy in South Carolina, it is essential that you understand the different types of bankruptcy available to you. Each type of bankruptcy is called a chapter, and they include Chapter 7, Chapter 13, Chapter 12, and Chapter 11.

Bankruptcy for individuals includes Chapter 7, Chapter 12, and Chapter 13. Of these, Chapter 7 is considered to be the most beneficial to petitioners. Chapter 7 discharges large amounts of debt while allowing you to maintain the majority of your assets. However, if you earn a steady income over a certain amount, you may not qualify for Chapter 7.

Bankruptcies for businesses include Chapter 7, Chapter 11, and Chapter 13 (for self-employed individuals). In many cases, the size of your business will decide which chapter of bankruptcy you are eligible for. For example, large businesses and corporations often apply for Chapter 11 bankruptcy.

If you are a South Carolina farmer or fisherman, you may file for Chapter 7, Chapter 12, or Chapter 13. Chapter 12 is a special type of bankruptcy reserved only for family farmers and fishermen. To learn more about the differences, please get in touch with our legal team.

Some individuals may qualify for several different types of bankruptcy, whereas others may qualify for only one type. It is highly recommended that you retain professional legal counsel from an experienced bankruptcy lawyer to discuss your unique needs and situation before proceeding. Our law firm has extensive experience providing knowledgeable legal representation to clients interested in bankruptcy. To learn more, please schedule your initial consultation today.

How Much Debt Do You Need to Be in Before Filing Chapter 7?

There is no specific amount of debt that you must be contending with before you file for Chapter 7 bankruptcy. However, before you file your paperwork and start the difficult process of bankruptcy, it is advisable that you speak with a knowledgeable bankruptcy attorney first.

What Happens After Filing for Bankruptcy in South Carolina?

The process of filing for bankruptcy allows you to discharge many different types of financial debts, halt calls from collectors and other agencies, and seek a clean slate for rebuilding your financial life.

Before filing for bankruptcy, it is worth considering some of the alternatives available to you. Many alternatives may be less costly than bankruptcy and do less damage to your credit record. In some situations, creditors may be willing to negotiate. In the case of a home mortgage, call your loan servicer to see what options are available. Some lenders may offer alternatives to bankruptcy, such as repayment plans, loan modifications, and forbearance.

After filing for Chapter 7 bankruptcy, many exempt assets will be allowed to be kept. However, certain non-exempt assets must be sold off by a trustee appointed by the bankruptcy courts. Non-exempt assets may include a second motor vehicle, investment accounts, collectibles or other valuables, recreational vehicles, and real estate property other than your primary residence.

Once your debts have been discharged, bankruptcy will remain on your credit report for up to seven years in the case of a Chapter 13 bankruptcy or a full decade in the case of a Chapter 7 bankruptcy.

How Does Bankruptcy Affect Your Financial Future?

Bankruptcy may solve your outstanding debt problems, but that does not mean bankruptcy comes without consequences for your finances.

In any Chapter 7 bankruptcy, there is a potential for the loss of non-exempt assets so that the proceeds from those assets can be applied to pay creditors. Chapter 7 bankruptcies remain on your credit report for ten years, but debtors are usually able to obtain new credit cards and auto loans soon after filing for bankruptcy. It should be noted, however, that such loans and credit cards may come with less favorable terms than someone with better credit.

Chapter 13 bankruptcy, or reorganization bankruptcy, does not involve selling off your non-exempt assets. Chapter 13 filings will remain on your credit reports for up to seven years. Your access to credit may be limited for the first couple of years following Chapter 13 bankruptcy, but this will steadily improve.

Is it Difficult to Get a Loan After Bankruptcy?

After filing for Chapter 7 bankruptcy, a debtor usually has to wait approximately two years from the discharge of debt before they can qualify for a conventional loan without the assistance of a co-signer with good credit.

Bankruptcy can stay on your credit report for between seven to ten years. During this time, you will need to focus on rebuilding your credit and making regular payments on time to keep your balances low. It is wise to be conservative with your credit card spending.

Also, most lenders are more likely to give small credit loans, secured personal loans, and other types of loans to people with hurt credit after bankruptcy.

Will Your Credit Score Take a Hit After Filing for Bankruptcy?

Yes. But remember, you likely already have bad credit if you’re in debt.

For mortgage loans, your bankruptcy filing will hinder your chances of getting a mortgage for the first two to three years after bankruptcy. However, this may depend on whether you do a conventional or FHA mortgage.

You might be able to get an auto loan soon after bankruptcy is completed, but you may have to pay higher interest rates.

Schedule an In-Depth Case Evaluation Today

Before filing for bankruptcy, it is important to consider all of your options. First, we highly recommend that you consult with experienced bankruptcy lawyers for legal assistance.

To learn more about our legal services, don’t hesitate to get in touch with our Rock Hill, SC, law office to schedule your case review today. You may reach us at 803-266-1812.