Chapter 13 bankruptcy in South Carolina provides debt relief and asset protection for people who are working or receive a steady income. Individuals and couples who have trouble paying their debts can turn to Chapter 13 Bankruptcy to reorganize their debts into a monthly plan they can afford.
That said, filing Chapter 13 is a big decision. You are committing to a bankruptcy repayment plan that could last for up to five years. This is why understanding the bankruptcy differences and understand your Chapter 13 plan payment is crucial to making the most informed decision. Let’s get started.
1. Chapter 7 vs. Chapter 13 Bankruptcy in South Carolina
Most Chapter 7 bankruptcy cases filed in South Carolina are no-asset Chapter 7 cases. In a no-asset Chapter 7 bankruptcy case, the debtor (a person who files for bankruptcy relief) can receive forgiveness of debt in four to six months without losing any property. If a debtor in Chapter 7 has property worth substantially more than the bankruptcy exemptions allow, the property could be sold at a bankruptcy auction.
Debtors filing under Chapter 7 must meet strict income requirements. The Chapter 7 process is reserve for people who cannot afford to repay their debts and individuals who have primarily business debts.
On the other hand, Chapter 13 bankruptcy cases are designed for individuals and couples who can afford to repay some of their debts, but may not have enough money to repay all debts. A Chapter 13 bankruptcy repayment plan can also help a debtor who may be facing foreclosure or repossession. The bankruptcy plan allows the person to catch up on mortgage payments over time. Some debtors may be able to lower their car payments through Chapter 13.
2. Calculating Chapter 13 Plan Payments in South Carolina
Your Chapter 13 plan payment is based on several factors. When calculating Chapter 13 plan payments, you must consider your income, expenses, debts, assets, and recent financial transactions. The Chapter 13 plan payment is based on your unique financial situation and the bankruptcy forms are complex. A such, we built the following South Carolina Chapter 13 calculator.
Factors used when calculating a Chapter 13 plan include, but are not limited to:
- Disposable Income — The amount of income you have each month after subtracting allowable payroll deductions and allowable living expenses from your gross monthly income.
- Assets — In some cases, the value of your assets could increase the amount of your Chapter 13 plan if your assets have large amounts of non-exempt equity. We discuss Connecticut bankruptcy exemptions in more detail below and how exemptions impact your Chapter 13 plan.
- Debts — Some debts must be paid in full through the Chapter 13 plan (priority unsecured debts such as taxes, alimony, child support, and administrative costs). Other creditors may receive partial payments, including unsecured debts, such as medical bills, credit card debt, and personal loans. Chapter 13 plans typically include back mortgage payments and car loan payments.
- Recent Financial Transactions — Some recent financial transactions could impact your Chapter 13 plan.
Understand how debts are coordinated in your Chapter 13 plan.
For example, some debts must pay in full through a Chapter 13 bankruptcy plan. Most debts owed to the government, including income taxes, also must be paid in full. If you owe domestic support arrearage (back alimony or child support payments), the arrearage must be paid in full through the Chapter 13 plan.
Other debts, such as medical debts and credit card debts, may only be paid a small percentage of the amount owed through the plan. When you complete your Chapter 13 plan, unsecured debts are discharged (forgiven). Unfortunately, student loans are not eligible for a bankruptcy discharge, so you continue to owe that debt after your Chapter 13 case is complete.
3. Means Testing in South Carolina
Means Testing is an important element of a Chapter 13 case. The Means Test calculates your average monthly income and disposable income for your Chapter 13 case. All debtors in Chapter 13 must complete the Chapter 13 Means Test.
Calculating Average Monthly Income
Average monthly income or current monthly income is based on household income for the six months preceding the Chapter 13 filing. All income received must be included in the calculations, including income contributed by a non-filing spouse or another family member. Current monthly income is the total of all income divided by six. That total is multiplied by 12 to calculate your annual median income. Feel free to use our average income calculator to help estimate your average monthly income for the past 6 months.
Your annual median income is compared to the annual median income of households in South Carolina. So if your income exceeds the median income for a household of your size, you must file a five-year bankruptcy plan.
Median income levels are based on current information from the IRS and Census Bureau. The figures adjust periodically, so you must use the most current figures when calculating the Means Test. You can view the median income figures of South Carolina below for cases filed on or after May 15, 2021. Please note that for households over 9 individuals, you would add an additional $9,000 for each household member.
|# of People||Annual Income|
Calculating Disposable Income for a Chapter 13 Plan
The second part of the Means Test calculates your disposable income. Disposable income is the amount of money you have available each month to pay debts. It is calculated by deducting monthly living expenses from monthly income. However, in most cases, a debtor must include disposable income in the Chapter 13 plan payment.
You can view the allowable living expenses on the website for the United States Trustee’s Office. Living expenses are deducted from your current monthly income calculated in the first section of the Means Test. For instance, examples of allowable living expenses include:
- Income taxes
- Contributions to qualified retirement accounts
- Required deductions from payroll (i.e. uniforms, union dues, etc.)
- Rent or mortgage payments
- Car payments
- Transportation costs
- Food and household goods
- Clothing and personal care items
- Health care expenses
- Life insurance and also disability insurance premiums
- As well as, alimony and child support payments
Some of the expenses are limited, and you may not be allowed to deduct all expenses, such as expensive memberships or designer clothing.
4. South Carolina Debtor Education and Credit Counseling Courses
Debtors who file Chapter 13 or Chapter 7 are required to complete two bankruptcy courses as part of the bankruptcy process. The Credit Counseling Course must be completed before you file the Chapter 13 bankruptcy petition. The Debtor Education Course is completed after you receive your bankruptcy case number.
Each course is available online or also by telephone from numerous agencies and companies. However, you must use a company or agency that is approved by the United States Trustee’s office. The list of the approved companies in South Carolina for credit counseling and debtor education courses is available from the UST’s office.
5. South Carolina Bankruptcy Exemptions
Debtors permit to keep certain property when they file bankruptcy. Federal bankruptcy exemptions found in 11 U.S.C. §562 explain the property that is protected during a bankruptcy case. You can also view a list of the federal bankruptcy exemptions published by the NCLC. South Carolina has chosen to opt out of the federal bankruptcy exemptions. If you have resided in South Carolina for at least 730 days before filing bankruptcy, you must use the South Carolina bankruptcy exemptions.
If you have not resided in South Carolina for at least 730 days before filing Chapter 13, you are required to follow the rules for bankruptcy exemptions for the state you resided in for the greater part of 180 days before the 730-day requirement.
Most of the South Carolina bankruptcy exemptions can be found in S.C. Code §15-41-30. These exemptions are adjusted every two years for inflation. Though, the current South Carolina bankruptcy exemptions are scheduled to increase on July 1, 2020. The current bankruptcy exemptions for South Carolina are for use in cases filed on or before June 30, 2020.
How Do South Carolina Bankruptcy Exemptions Impact My Chapter 13 Plan?
Net equity in the property is calculated by subtracting the allowed bankruptcy exemption and any valid lien from the fair market value of the property. If the result is positive, that amount is considered non-exempt equity.
Non-exempt equity can increase your Chapter 13 plan payment. However, most debtors who file Chapter 13 in South Carolina have very little equity in the property that is not exempt under the South Carolina bankruptcy exemptions.
6. Bankruptcy Courts and Trustees for South Carolina
South Carolina is one bankruptcy district, even though there are three court locations. The Bankruptcy Clerk of Court for the District of South Carolina is located in the J. Bratton Davis U.S. Bankruptcy Courthouse at 1100 Laurel Street in Columbia, SC. However, bankruptcy hearings are held in Spartanburg and Charleston. Your hearing location is based on your residence at the time you file your bankruptcy case.
There are several Chapter 13 trustees in South Carolina. Each trustee handles cases in one of the three divisions. Chapter 13 trustees review the bankruptcy forms and Chapter 13 plan filed in each case. Chapter 13 trustees are responsible for receiving monthly payments and also paying creditors according to the terms of the confirmed Chapter 13 plan.
The Chapter 13 trustees in South Carolina are:
|Robert F. Anderson||(803) 252-8600|
|Kevin Campbell||(843) 884-6874|
|John K. Fort||(864) 237-8284|
|Janet B. Haigler||(803) 261-9806|
|Michelle L. Vieira||(843) 497-9800|
The Chapter 13 trustee assigned to your case also hears 341 Meetings. The 341 First Meeting of Creditors is a short, informal hearing in which the trustee asks the debtor questions under oath about their bankruptcy case. Creditors may appear to ask questions, but most creditors never bother to attend the 341 Meetings.
7. Alternatives to Filing Bankruptcy in South Carolina
In some cases, a non-bankruptcy debt solution might be more beneficial. Therefore, some individuals and couples can benefit from debt settlement, a debt management app, or a debt consolidation loan. Ascend wants to help you compare your debt relief options so that you can choose the best option for your financial situation, goals, and needs.
You can learn more about other debt-relief options in our Debt Settlement Guide and our article that compares Debt Management vs. Debt Settlement. You may also want to read our FAQs about debt settlement and compare debt consolidation to debt settlement. Our Savvy Debt Payoff app provides the tools and resources you need to manage your finances and also get rid of debt without filing bankruptcy.
Should I Pursue A Chapter 13 Bankruptcy Case in South Carolina?
We understand that you may be worried about the consequences of filing Chapter 13 bankruptcy in South Carolina. Our mission is to help you explore your options for getting rid of debt. If your best option is filing Chapter 13, we can give you resources and information to help you through the Chapter 13 process.
We can provide resources and tools to help you set up a repayment plan to get rid of debt while learning how to manage your finances effectively for a better financial future if you decide that bankruptcy is not right for you, If you have questions about eliminating debts you cannot afford to pay, please contact Ascend online or call/text us at 833-272-3631.