Chapter 7 bankruptcy is the legal process designed to free you from unsecured debts like medical bills, credit cards and payday loans, relatively quickly. The process is usually completed within 4 to 6 months after filing.
You are able to keep all exempt assets. Exemptions are governed by state law in South Carolina (so long as you have lived in South Carolina for the appropriate amount of time). If you do not qualify for state exemptions, Federal or your previous state’s exemptions may apply.
For an individual to qualify for a Chapter 7, specific eligibility requirements regarding income level and means testing must be met. The “Means Test” (known affectionately in my office as the Mean Test) involves an evaluation of your gross household income for the previous six month, as well as the number of individuals in your household. The information is used to determine if your household income falls within the IRS guidelines after subtracting allowed expenses.
A Chapter 7 bankruptcy stays on your credit report for 10 years, while a Chapter 13 bankruptcy stays on your credit report for 7 years.
Chapter 7 bankruptcy does not discharge (erase or get rid of) debts for:
- Past due or future child support
- Past due or future alimony or spousal support
- Debts from a Family Court property settlement agreement or order
- Filed tax debts less than 3 years old
- Tax debts for sales tax or withholding tax
- Student loans
- Drunk driving judgments
- Real estate taxes
- Criminal fines & restitution
- Debts incurred by fraud or intentional wrongdoing
If you want to keep your home or vehicle in a Chapter 7 bankruptcy, we recommend that your payments are current at the time you file bankruptcy. A Chapter 7 cannot modify your mortgage or vehicle loans – the payment stays the same.