South Carolinians who are filing for a Chapter 13 bankruptcy may not be aware that some debts are not eligible for discharge during the bankruptcy process. Generally, child support, student loans, legal fines and other long-term debt such as mortgages are not eliminated during bankruptcy. This means that collections on these types of debt may be continued, particularly in the case of child support.
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.
When a South Carolina resident files for bankruptcy, an automatic stay goes into effect that prevents creditors, including mortgage holders, from continuing any collection activity as long as the stay is in effect. When the debtor chooses to file chapter 13 bankruptcy, he or she will work out a debt repayment plan that will last between three and five years.
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.
A loan modification may enable a South Carolina homeowner to avoid foreclosure. When a loan is modified, the terms of the loan are changed to help a borrower stay current with payments. A loan modification may take place even if a borrower is in the midst of a Chapter 13 bankruptcy. Filing for bankruptcy may give a homeowner leverage because an automatic stay goes into effect as soon as the case is filed.