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Chapter 13 bankruptcy in South Carolina

When people are considering filing bankruptcy as an option to take care of unmanageable debt, they normally consider filing either under Chapter 7, which is a complete liquidation, or under Chapter 13, which is a voluntary reorganization of debt. Those who choose Chapter 13 will in most cases be able to retain their assets while stretching out payments for a set period of time. Unsecured debts remaining at the end of the repayment plan period will be discharged.

Chapter 13 has some benefits to filers. The main benefit is the ability to retain some property that would otherwise be liquidated under Chapter 7. The repayment plan will usually last between three and five years.

Not everyone is eligible to file under the chapter, however. The requirements include that the debtor has filed personal income tax returns for each of the past four tax years immediately preceding the date of filing. They must also have a regular and verifiable income source from wages, a sole proprietorship or self-employment. Along with the bankruptcy petition, the filing will include schedules of income and assets and a proposed plan of repayment. If the repayment plan is approved, all payments will need to be made as agreed or the bankruptcy court may either dismiss the case or convert it to a liquidation proceeding under Chapter 7.

Chapter 13 bankruptcy can be an attractive option for those who are able to qualify. Delinquent mortgage payments can be covered over the life of the plan, allowing people to have more time to catch up the delinquency and get back on track. People may want to discuss the option of Chapter 13 bankruptcy with an attorney who has experience in these matters.

Source: IRS.gov, "Chapter 13 Bankruptcy – Voluntary Reorganization of Debt for Individuals", January 05, 2015

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The Huggins Law Firm, PA

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