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
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.