Bankruptcy in Charleston
Filing bankruptcy is not on anyone’s bucket list, but life happens — large medical bills, divorce, job loss or a downturn in business all can leave you drowning financially. Bankruptcy can offer a fresh start.
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Thousands of South Carolina residents are facing overwhelming debt and the possibility of foreclosure or repossession. If you are in this situation, a consultation with a qualified bankruptcy attorney will provide you with solutions that can relieve the burden of crushing debt.​
Making the decision to call an attorney or to file bankruptcy is difficult. We understand how overwhelmed you may be at the thought of losing your home, your vehicle or other property. For over 15 years, we have provided bankruptcy services for individuals, couples and business owners. Our attorneys and staff listen to your concerns and together we come up with a solution that best meets your needs. We treat our clients with dignity and respect.​
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If you are struggling to pay your bills, you are receiving harassing telephone calls from your creditors, or you have fallen behind on your mortgage, filing for bankruptcy may be the best choice to regain control of your finances, and begin building a sound fiscal future.
What is Bankruptcy?
Bankruptcy is the legal process for a person who is unable to pay his or her bills to get a fresh financial start. The right to file bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. Filing for bankruptcy immediately STOPS all harassing creditor phone calls, lawsuits and garnishments until it is sorted out in court. This is called the “automatic stay.” Bankruptcy can give you a new fiscal beginning.
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Bankruptcy may allow you to keep all of your property and eliminate or restructure your debts. The type of bankruptcy, Chapter 7 or Chapter 13, will depend in part on:
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The amount of debt you owe
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Your current income and expenses
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The type of debts you owe
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The value and type of property you own
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The assets you would like to keep
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The interest rate on automobiles loans and age of loan
Chapter 7 – Bankruptcy’s Fresh Start
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.
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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 months, 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.
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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:
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Past due or future child support
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Past due or future alimony or spousal support
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Debts from a Family Court property settlement agreement or order
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Filed tax debts less than 3 years old
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Tax debts for sales tax or withholding tax
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Student loans
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Drunk driving judgments
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Real estate taxes
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Criminal fines & restitution
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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.
Chapter 13 Bankruptcy – Reorganization
What Is It and Who Can File?
Chapter 13 Bankruptcy allows individuals to reorganize their debts through a repayment plan that lasts between 3 to 5 years. You make monthly payments to a Chapter 13 Trustee to pay toward your debts. To qualify, individuals must have a regular income greater than allowed, reasonable living expenses. In addition, a person cannot have unsecured debts of more than $465,275 or secured debts more than $1,395,875 to qualify for a Chapter 13. At the end of the successful completion of the bankruptcy plan, any remaining portion of the unsecured debt is discharged.
How Much Do You Have to Pay?
You are able to keep all of your assets in a Chapter 13. The amount you repay to your creditors (anywhere between 1% to 100% plus interest) depends on several factors: the value of your assets, whether the assets are exempt, the amount of your income, and the type of debt. Some types of debts, known as priority claims, must be paid in full. Taxes and past due child support are examples of priority debts. Also, the amount you are past due on your mortgage must be paid in full through the plan if you want to keep your real estate.
Why file a Chapter 13?
A Chapter 13 Bankruptcy allows you to repay debts that are not discharged in a Chapter 7. We often consider a repayment plan when:
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You owe taxes or past due child support
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You are behind on your house or automobile loans
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You owe a former spouse under a property settlement agreement
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Your assets are worth more than the exemptions
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Your income exceeds the Means Test
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Your high interest automobile loan is at least 2 ½ years old and you owe more than the vehicle is worth
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You have liens that are greater than the value of the assets securing the debt.
A Chapter 13 Bankruptcy filing provides tremendous protection and flexibility in dealing with your debt. You can keep all your property, strip off second mortgages, value some secured debt and reduce your interest rate on many secured debts. To learn more about Chapter 13, and how you can use it to protect your future, contact our Chapter 13 attorneys at 843-849-1900.
Saving Your Home
A Chapter 13 Bankruptcy is a powerful tool to potentially save your home. Upon a bankruptcy filing, any foreclosure lawsuit is stayed or put on hold.
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Once a person gets behind on their mortgage, it is incredibly difficult to become current. However, a Chapter 13 Bankruptcy can solve this problem. From the funds you pay to the trustee as part of your bankruptcy repayment plan, the trustee will pay the past due amount (called the arrearage) to your mortgage company over the life of your bankruptcy plan.​
The amount you pay to the mortgage company for the arrearage is calculated by dividing the amount past due by the number of months in your plan (anywhere from 36 month to 60 months) and it is included in your monthly trustee payment. For example, if your mortgage is past due by $10,000 and your bankruptcy plan is for 57 months, the plan will direct the trustee to pay $176 per month to the mortgage company.
​After the bankruptcy is filed, you are required to make your regular mortgage payment on time each month. This is very important. When you have made all your Chapter 13 payments to the trustee, you will be current with your mortgage.
No Change in Mortgage Payments
Unfortunately, the current laws do not allow the bankruptcy court to change your regular mortgage payment or interest rate. We are hoping this will change, but are not holding our breath. Bank lobbies are powerful and well-funded.​
Mortgage Modifications
​We have recently seen mortgage companies offer mortgage modifications to people in bankruptcies. If you struggle to pay the regular mortgage payment, I recommend that you continue to work with your mortgage company after filing bankruptcy to see if you are eligible for one of the many modification programs. If you succeed in getting a loan modification after a bankruptcy filing, you are required to seek permission from the bankruptcy court. Immediately contact your bankruptcy attorney if you qualify for a modification.​
Stripping Off 2nd Mortgages or HELOCs
You may be able to “strip off” your 2nd mortgage or home equity line of credit in a Chapter 13 and make the debt unsecured. If your home is worth less than the first mortgage, then it may be possible to pay stop paying the 2nd mortgage, discharge the debt and have the 2nd mortgage released after successful completion of your Chapter 13 plan.
There may be additional legal fees for this matter; however, the savings may well be worth it. To prove the value of your property, you will need to get an appraisal.
Meeting of Creditors
Everyone who files a Chapter 7 or 13 bankruptcy must go to “court” at least one time. This court proceeding is the Meeting of Creditors, also called a §341 hearing because it is required by that section of the Bankruptcy Code (11 U.S.C. 341). For many, the prospect of the §341 hearing causes stress or anxiety. It is normal to be apprehensive, but there is nothing to be afraid of. Your attorney will be present and prepare you to meet with the trustee assigned to your case.
What is the §341 Hearing?
The §341 hearing is an opportunity for you to meet with the bankruptcy trustee assigned to your case. The hearing is scheduled approximately 30 days after a bankruptcy petition is filed. Creditors may attend, although they rarely do. Most §341 hearings last less than 5 to 10 minutes.
Role of the Trustee
When a bankruptcy is filed, an impartial bankruptcy trustee is appointed to review and administer the case. Usually the bankruptcy trustee is a local bankruptcy attorney. In Charleston, Kevin Campbell and Michelle Vieira are appointed as the Chapter 7 trustees and James Wyman is the Chapter 13 trustee.
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The trustee reviews the bankruptcy petitions and schedules and the supporting information to assure that documents comply with the law. In a Chapter 13, the trustee makes sure that the proposed plan pays the proper amount to the creditors, manages the claims process and pays creditors.
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The trustee asks a series of questions of each debtor at the Meeting of Creditors. These questions must be answered under oath.
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In a majority of Chapter 7 cases, people are allowed to keep all their assets because they are protected by exemptions. If you have non-exempt assets, then the trustee may sell those assets to pay creditors.
Preparing for the Meeting of Creditors
Review your bankruptcy petition and schedules. Be familiar with the information in your petition. If there are any changes, advise your attorney before the hearing and let the trustee at the beginning of the hearing. The typical questions are as follows:
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State your name and current address for the record.
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Did you read and review the information sheet from the United States Trustee?
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Did you read and sign the petition, schedules, statements and related documents?
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Are you personally familiar with the information contained in the petition, schedules, statements and related documents?
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To the best of your knowledge, is the information contained in the petition, schedules, statements and related documents true and correct?
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Are there any errors or omissions, to make it true and accurate?
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Have you listed all income you have received from all sources in the past 6 months, including wages, inheritances, loans, tax refunds and retirement?
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Have you listed all your assets?
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Have you listed all your debts?
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Have you filed bankruptcy before? If so, the trustee will ask when.
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Is the copy of the tax return you provided a true and accurate copy of the most recent tax return you filed?
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Have you filed all tax returns for which you are legally responsible to file?
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Are you entitled to a tax refund for this or any other year, or have you recently received one?
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Do you have a domestic support obligation? (This is typically alimony or child support). If yes, are you current on your post-petition domestic support obligations?
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If you own real estate, the trustee will ask:
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What do you estimate the present value of the property to be? or If you sold the property today, what do you think you could sell if for?
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How did you arrive at that value?
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Have you given away, sold or transferred any property within the last 6 years? (Sometimes this is qualified to assets over $5000 or sold/given to family members.) If yes:
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What did you transfer? To whom was it transferred?
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What did you do with the funds?
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The trustee may ask specific questions about your petition and schedules. Please review and be familiar with the information in your petition.
What to bring to the §341 Hearing?
You must provide proof that you are who you say you are and proof of your social security number. Typically, people bring a driver’s license and social security card. ID’s must have your current address.
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ORIGINAL DOCUMENTS ARE REQUIRED. Acceptable forms of proof are:
A. Picture ID:
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state driver’s license
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government ID
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state ID
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student ID
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U.S. passport
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military ID
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resident alien card
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Mexican consulate card (“matricula consular”)​
B. Proof of SSN:
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social security card
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medical insurance card
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pay stub
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W-2 form
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Internal Revenue Service Form 1099
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Social Security Administration report