How to Protect Your Assets in a South Carolina Chapter 13 Bankruptcy

Are Your Debts Out of Control?

Unexpected expenses – medical bills and home repairs, for example – can place you in serious debt. If your debts are out of control, you may be considering bankruptcy, and you should speak immediately with a South Carolina bankruptcy lawyer.

A bankruptcy lawyer can explain your rights and options regarding bankruptcy. If you’re ineligible for a Chapter 7 bankruptcy, or if you need to hold onto assets that you would lose through a Chapter 7 bankruptcy, your lawyer will explain the Chapter 13 bankruptcy option.

What Are Chapter 7 and Chapter 13?

The federal laws of the United States are called the U.S. Code. As of 2024, that Code consists of 54 “titles” or sections. The U.S. Bankruptcy Code is Title 11. The chapters of Title 11 that address personal bankruptcy are Chapter 13 and Chapter 7.

How do Chapter 13 and Chapter 7 bankruptcies differ? What is required in order to file for bankruptcy in South Carolina? Can you protect any of your assets in a bankruptcy? And what will a York County bankruptcy attorney do on your behalf?

What Are Secured Debts and Unsecured Debts?

Consumer debts are either “secured” or “unsecured” debts. Secured debts reduce a lender’s risk because secured debts provide collateral to a lender until the debt is fully paid. Unsecured debts are the loans that require no collateral.

Unsecured debts (medical and credit card debts, for example) are discharged – that is, eliminated – by bankruptcy. Secured debts – taxes, student loans, alimony, child support, and criminal or civil fines – are not. If your debts are mostly unsecured, bankruptcy may be your best option.

What Happens Immediately After You File for Bankruptcy?

After you file for bankruptcy, a court order called an “automatic stay” takes effect immediately. It blocks creditors and debt collectors from suing you for debt or from taking any other collection action against you. Creditors may not even call you on the phone during the bankruptcy process.

An automatic stay stops a creditor from garnishing your wages, foreclosing on your home, repossessing your vehicle, freezing your bank accounts, or taking any other debt-related action against you, and it gives you time to put your finances in order.

How Do Chapter 13 and Chapter 7 Bankruptcies Differ?

The bankruptcy court liquidates most of your assets in a Chapter 7 bankruptcy in order to pay as much of your unsecured debt as possible. At the conclusion of the Chapter 7 process, unsecured debts that remain unpaid are discharged.

When you file a Chapter 13 bankruptcy (often called a “reorganization bankruptcy”), you set up a payment schedule with your bankruptcy lawyer’s help – a schedule that will pay your secured debts and any unsecured debts that can also be paid – over a period of three to five years.

To qualify for a Chapter 7 bankruptcy, you will be required to pass a means test. The test disqualifies anyone who can still pay a percentage of his or her debts. If the means test disqualifies you for Chapter 7, you may still file for bankruptcy under Chapter 13.

How Does a Chapter 13 Bankruptcy Protect Assets?

With a Chapter 13 bankruptcy, exemptions allow you to keep assets that you would lose with a Chapter 7 bankruptcy. Some states allow bankruptcy filers to use either their own state’s bankruptcy exemptions or the federal exemptions. South Carolina, however, does not allow bankruptcy filers to use the federal exemptions. Additionally, South Carolina allows exemptions for tax-exempt retirement accounts, college investment program trust funds, health aids, and burial plots.

What Happens to Your Non-Exempt Property?

You will either lose your nonexempt property in a bankruptcy or pay to keep it. If you file for a Chapter 7 bankruptcy, a bankruptcy trustee (someone designated by the court to oversee the bankruptcy) sells your nonexempt property items and distributes any proceeds to your creditors. Most times debtors will not have to sell any property. A knowledgeable bankruptcy attorney can help you determine if you will have to sell any assets.

Usually with a Chapter 13 bankruptcy, you will pay your unsecured creditors the estimated value of your nonexempt property. After reviewing your case, a South Carolina bankruptcy lawyer can discuss with you how to take full advantage of the Chapter 13 exemptions.

What Else Should You Know About Bankruptcy?

If you cannot pay your debts, bankruptcy may not be your only alternative. Candidly speaking, bankruptcy entails some negative ramifications, at least temporarily. If you have other options for dealing with your debts, your bankruptcy lawyer will explain those options to you.

But if bankruptcy is your only realistic choice, a York County bankruptcy attorney will offer the personalized advice and guidance you need. Your attorney will answer your questions about bankruptcy and guide you through the bankruptcy process.

How Should You Choose a Bankruptcy Attorney?

If you’re deeply in debt and considering bankruptcy, discuss your options with attorney Tracy Bomar-Howze at the Howze Law Firm. We have years of experience preparing bankruptcy filings, meeting the court’s deadlines, and preparing repayment plans on behalf of our clients.

At the Howze Law Firm, we help individuals and families who face wage garnishments, repossessions, and overwhelming debt. If bankruptcy is the right option for you, attorney Tracy Bomar-Howze and the Howze Law Firm team will guide you through every step of the process.

Before you make a final choice to file for bankruptcy, call the office of the Howze Law Firm at 803-266-1812, and schedule an initial case evaluation. We serve clients across South Carolina, and we’ll find the answer that is best for you, your family, and your long-term interests.