South Carolina Bankruptcy Abuse
Bankruptcy is not a quick fix for poor management of debts and credit cards. Bankruptcy is for those who cannot budget themselves out of debt in a minimum of five years, those who can only pay the minimum amounts on their bills, those who have receive foreclosure on their loans and mortgages, or those who have had extraneous financial setbacks from divorces, job loss, or client loss. Because many have abused the United States’ bankruptcy system, the government created new laws for how bankruptcy is to be used and how to prevent abuse.
The new Bankruptcy Abuse Prevention and Consumer Protection Act sets new regulations on who can apply for bankruptcy. This act also limits who has access to the bankruptcy courts of South Carolina and other states. Only certain individuals are eligible and new ways of picking out offenders have been installed.
A mandatory means test was created to measure an individual’s average income over the past six months to the median of that entire state. In this case South Carolina residents will be compared to other South Carolina residents and not those of North Carolina or Georgia. If individuals fall below the median they may be eligible for Chapter Seven bankruptcy. If individuals come above the median then they may be exempt from bankruptcy or may be eligible for Chapter Thirteen bankruptcy, depending on the circumstances.
Mandatory Courses and Regulations
To continue to ensure that bankruptcy is not abused, those who apply for bankruptcy are required to attend a financial management course at least six months before they are able to apply for bankruptcy. Another management course is also required within ninety days of bankruptcy completion. The Bankruptcy Abuse Prevention Act set new bans on the use of Chapter Seven bankruptcy, increased the payments for Chapter Thirteen bankruptcy, reduced the judicial discretion for competing balances of interests, and created new presumptions for those with increasing penalties.
How Bankruptcy Works
Bankruptcy is a way for individuals to disentangle themselves from their debt problems. Bankruptcy does not eliminate child support, alimony, cash advancements of eight hundred twenty-five dollars or more within seventy days of bankruptcy filing, a majority of student loans, most back taxes, large purchases of five hundred fifty dollars or more within ninety days of bankruptcy filing, fraudulent debts, or penalties and fines issued through a government agency.
Kinds of Bankruptcy
South Carolina has different kinds of bankruptcy for consumers. Chapter Seven bankruptcy allows individuals to eliminate their debts through the sale of non-exempt property. The court will appoint a trustee to the case who will liquidate the property deemed non-exempt by the state. The acquired funds will be used to pay off creditors.
The entire process takes a maximum of six weeks. Chapter Thirteen bankruptcy allows individuals to use their own income to pay off their debts in a maximum of five years. The court will create a personal repayment plan for the individual’s specific circumstances and income. The plan will note how much needs to be paid each month for the five-year time period.