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Comparing available personal bankruptcy options for debt relief

South Carolina residents with significant debt may be interested in a comparison of the two major types of personal bankruptcy: Chapter 7 and Chapter 13. Depending on a number of factors specific to a person's situation, each may have debt relief benefits.

A Chapter 7 bankruptcy uses a means test, which looks at a person's income to determine eligibility for the bankruptcy. Their income should generally be under the median income in their state of residence to have a good chance at being accepted for Chapter 7. On the other hand, a Chapter 13 bankruptcy will allow those with higher incomes to file. However, their total unsecured debt cannot be higher than around $307,000, and their secured debt must be capped at just under $923,000.

The mechanics of both bankruptcies are very different, as well. While both end with the discharge of debts, a Chapter 7 bankruptcy involves the sale of certain assets owned by the person. In exchange for this, their debt is discharged provided that they have gone through credit counseling in the six months before filing. In a Chapter 13 bankruptcy, the person gets to keep their assets, but they enter into a payment plan that can last up to five years. After this payment plan is completed, the debts will then be discharged.

Other differences deal with how specific types of assets are handled, the effect the bankruptcy has on the person's credit and how often that type of bankruptcy can be filed. An attorney with experience in personal bankruptcy may be able to walk a person through the process, from filing to discharge. They may also be helpful in negotiating lower payments with creditors and other debt relief options.

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The Huggins Law Firm, PA

Columbia Office
1812 Lincoln Street
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Columbia, SC 29201

Phone: 803-764-1558
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925-D Wappoo Road
Charleston, SC 29407

Phone: 843-509-0039
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