Filing Chapter 7 Bankruptcy In South Carolina

Chapter 7 Bankruptcy is the fastest, easiest, most common and least expensive bankruptcy process. Chapter 7 Bankruptcy is called a straight bankruptcy because your assets will be liquidated by a court appointed trustee and the proceeds will be used to pay your creditors. Federal bankruptcy law will determine which creditors are priority creditors and who will be paid first. If you do not have any assets, it will be called a “no asset” bankruptcy case.

Most unsecured debt will be discharged by filing Chapter 7 Bankruptcy. Dischargeable unsecured debt may include: unsecured personal loans, credit card bills and hospital bills. If you are an individual, corporation, partnership or married couple you may qualify for Chapter 7 Bankruptcy.

The first step in Chapter 7 Bankruptcy is to contact your South Carolina Bankruptcy Attorney to determine if you qualify to file Chapter 7 Bankruptcy. If you do, and you think bankruptcy is the right option for you, your bankruptcy lawyer will file the bankruptcy petition, the schedule of liabilities and assets, and information about your income and expenses. Filing the bankruptcy petition will temporarily halt debt collection efforts, but debt collection may continue if the bankruptcy judge allows.

There have been changes to bankruptcy law which has made it difficult to qualify for Chapter 7 Bankruptcy. Under the Bankruptcy Abuse Prevention and Consumer Act (BAPCPA), you will now have to pass an income test, take a credit counseling course, and complete a financial management course.

The most significant new requirement of the BAPCPA was to require you to pass an income test. The income test evaluates your median income to determine if it less or equal to other South Carolina families of the same size, it your median income is less than other South Carolina families, you can file Chapter 7 Bankruptcy. If your median income is more than other South Carolina families you will have to complete additional “means tests”.

The goal of the BAPCPA was to force more individuals to repay a portion or all of their debt by filing Chapter 13 Bankruptcy. The means test evaluates your disposable income to determine if you can repay your creditors. The means test calculation will take your gross income and subtract pre-determined expenses such as your home mortgage, car payments, child support, school tuition ($1650), and taxes owed, if the amount of disposable income remaining will allow you to pay $6,000 (100/month) over the next sixty months in debt payments, you will probably not be allowed to file Chapter 7 Bankruptcy. If you fail this test, but you could pay 25% of your disposable income for debt repayment over the next sixty months, you will probably not be able to file Chapter 7 Bankruptcy.

To determine your state median, you can use the State Median Data provided by the United States Trustee Program. For the State of South Carolina, after March 15, 2009, the median income for a single wage earner in the state of South Carolina was $38,728 and for a family of two it was $50,823. For a family of three it was $54,834 and for a family of four it was $65,974.

Means testing can be complicated and it is important to contact a South Carolina Bankruptcy Lawyer to determine if you can file Chapter 7 Bankruptcy.

Filing Chapter 7 Bankruptcy In South Carolina

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