WHAT CAN I KEEP? SOUTH CAROLINA BANKRUPTCY PROPERTY EXEMPTIONS

Thousands of South Carolinians are increasingly faced with growing debt, forcing them to consider filing for bankruptcy. Perhaps the main concern is whether you will be flat broke when you emerge from bankruptcy. The answer is: No!

General law

The purpose of the Bankruptcy Code is to provide debtors with a fresh start and the Code allows debtors to claim certain assets as exempt, to enable the debtor to have some ability to fund that fresh start and not be a public charge.

Each state designates specific property that debtors can exempt from bankruptcy. Yes, creditors must be paid, but you must be able to come out of the bankruptcy process and not be left in poverty. When you begin the bankruptcy process, you will be asked to list what property you claim as exempt.

South Carolina exemptions

The following are the main South Carolina exemptions:

  • Homestead: $56,150. $112,275 for multiple property owners. $5,625 for other property if you do not take a homestead exemption.
  • Wages: 100 percent of earnings.
  • Automobiles: $5,625 for a motor vehicle.
  • Personal Property: $4,500 for household furnishings, clothing, appliances, books, animals, crops and musical instruments; $1,125 for jewelry; $5,625 for cash and liquid assets; $1,675 for implements, professional books, and tools of the trade; and 100 percent for prescribed health aids.
  • Miscellaneous, including: Insurance, alimony and child support, pensions, and public benefits (for example, Social Security).
  • "Wild card" ($5,625).

Proposed revision

It should be noted that there is currently a bill before the 2014 Legislature, filed in December 2013, to revise the homestead exemption to eliminate dollar amount and to provide instead: "A homestead, if located outside a municipality, to the extent of 160 acres of contiguous land and improvements, may not be reduced without the owner's consent by reason of subsequent inclusion in a municipality; or if located within a municipality, to the extent of one-half acre of contiguous land, the exemption is limited to the residence of the owner or the owner's family. These exemptions inure to the surviving spouse or heirs of the owner. The homestead is not subject to devise if the owner is survived by a spouse or minor child, except the homestead may be devised to the owner's spouse if there is no minor child. The owner of homestead real estate, joined by the spouse, if married, may alienate the homestead by mortgage, sale, or gift. If the owner or spouse is incompetent, the method of alienation or encumbrance is as provided by law."

In addition, the proposed amendment denies any bankruptcy exemption to a person convicted of an offense involving fraudulent business practices.

This language is proposed only and has not been passed by the Legislature; the law is ever changing and diligence is required to keep up with the most-recent developments.

Consequences

The consequences of bankruptcy do not include abject poverty. The number of property exemptions is long and extensive. However, the consequences of bankruptcy, while not draconian, do include some serious repercussions, including your bankruptcy being listed on your credit report for 10 years, probably making it harder for you to get credit in the future.

Given the present state of the economy, this number of bankruptcy filings may very well increase in the years ahead. If you are having serious financial or debt problems, the best solution is to seek out a top South Carolina bankruptcy lawyer attorney to explore your options and to aid you in your road to financial freedom.