Will I Lose My House or Car If I File Chapter 7 Bankruptcy in South Carolina?
It’s the question almost every client asks before they ask anything else: “If I file bankruptcy, am I going to lose my house? My car? Everything I own?”
That fear keeps a lot of people stuck. Paying minimums on debt they’ll never catch up on. Dodging calls from collectors. Trying to make the budget work with rising cost of living. People are hesitant to reach out for help and it’s usually because of a misunderstanding of how Chapter 7 actually works.
Here’s the short answer: most people who file Chapter 7 in South Carolina keep everything they own. Here’s why.
Exemptions in General
When you file bankruptcy, you have to list all of your assets and all of your debts. No matter how small or how old, everything you own is an asset. A used mattress or a hand-me-down dresser may have little value if you were to try to sell it today, but everything you own is an asset that has some value.
Exemptions Property vs Non-Exempt Property
- Exempt property: protected. The trustee can’t touch it, no matter what.
- Non-exempt property: not protected. Non-exempt property could be sold by the Trustee to pay creditors.
The entire strategy in a well-prepared Chapter 7 case is making sure as much of your property as possible falls into the “exempt” column. For most working South Carolinians, most, if not all their assets are protected by the exemptions.
What South Carolina Law Actually Protects
Each state has its own exemptions and there is a separate set of exemptions under Federal law. If you have been living in South Carolina for two or more years, you can use the South Carolina exemptions. If you have not been in South Carolina for two years, you still get exemptions to protect your property but you should consult with an attorney to see what exemptions are available in your case.
South Carolina has its own set of exemptions that apply to bankruptcy filers in the state, and they cover the things people worry about most. Most of South Carolina can be found in the South Carolina Code of Laws annotated, Section 15 chapter 41
- Your home. A homestead exemption protects a set amount of equity in the house you live in, enough for many filers to cover their full equity.
- Your vehicle. There’s a specific exemption for one motor vehicle, protecting a set amount of equity in the car you use to get to work, take your kids to school, and live your life.
- Household goods and personal property. Furniture, appliances, clothing, and other everyday belongings also get a separate exemption.
- Personal Injury Lawsuits. Lawsuits settlements resulting from personal injuries or workers compensation claims are almost always protected under South Carolina law. Some other types of lawsuits are not entitled to the same protections as personal injury case.
- Tools of your trade. If you need specific equipment to do your job, there are exemptions built for that too.
- Retirement accounts. 401(k)s, IRAs, and pensions are almost always fully protected.
Exemption amounts change and are updated every few years. Call today so we can review the updated exemption amounts with you and explain how the exemptions will apply in your case. Whether or not your assets fall in the exempt or non-exempt category depend heavily on your specific assets: how much equity you have, what you owe against it, and what else you own. That’s exactly why this isn’t a do-it-yourself calculation. A good attorney runs your numbers before you file, not after, so there are no surprises.
What If, after my Exemptions, I have Equity in my Assets?
If you have equity or value in your assets even after all applicable exemptions are used in your case that does not mean you cannot file bankruptcy. If you have equity in your assets over the available exemption amount a chapter 7 may not be a good fit for you if you want to keep the assets. However, a chapter 13 could be a good fit and could be a very beneficial a way to help you deal with your debts.
So Why Does the “Lose Everything” Myth Persist?
Three reasons, honestly:
- Chapter 7 is often referred to as a “liquidation.” The word alone sounds scary and like everything gets sold. In practice, the vast majority of filers have little or no non-exempt property, so there’s nothing to liquidate.
- Filing Without an Attorney or Choosing the Wrong Attorney. Having representation matters and who you hire to represent you matters in bankruptcy cases. People who chose to file on their own can make mistakes an experienced attorney would not. Hiring an attorney who is inexperienced or will not take the proper amount of time and care when preparing your case can cause issues for you.
- Horror stories travel further than boring outcomes. The person who lost a boat they couldn’t protect makes for a better story than the hundreds of people who kept their house, their car, and their peace of mind.
If you have unusually high equity, a second property, or valuable assets outside the normal exemption categories, that’s exactly the kind of case where an attorney matters most: figuring out the right strategy (or the right chapter) before you file, not after.
The Real Question Isn’t “Will I Lose Everything.” It’s “What Does My Specific Situation Look Like?”
Every case comes down to your specific numbers: what you own, what it’s worth, what you owe against it, and your household income. That’s not something a blog post, ours or anyone else’s, can answer for you. It’s something a 15-minute conversation can.
If you’re in Columbia, Greenville, Charleston, Florence, or anywhere in South Carolina and you’re losing sleep over debt, the first step isn’t filing paperwork. It’s finding out where you actually stand.
Schedule a free, no-pressure consultation with V.R. Perry Law today. We’ll walk through your situation honestly, including whether bankruptcy is even the right tool for you, so you can stop guessing and start planning your next move.
This article is for general informational purposes only and does not constitute legal advice. Every bankruptcy case is different. Contact V.R. Perry Law for guidance specific to your situation.