A May bankruptcy court ruling may make it easier for South Carolina residents to get a better handle on their own debt. According to the U.S. Bankruptcy Court for the Western District of Arkansas, a couple was allowed to surrender their vehicle to their creditor and convert the unpaid balance to an unsecured debt. This was despite the fact that their Chapter 13 bankruptcy plan had already been confirmed.
Those in South Carolina interested in bankruptcy matters or considering bankruptcy may have more to mull over as the U.S. Supreme Court's May 15 decision created a lot of questions. In Midland Funding, LLC v. Johnson, the court decided 5-3 that federal law is not violated when debt collectors file 'stale" claims.
When South Carolina debtors file for a Chapter 13 bankruptcy, they set up a payment plan to repay creditors out of their income over three or five years. The payment plan is approved by a court and administered by a trustee. In some cases, after a payment plan is approved, a mortgage lender might file a claim that lists a different payment amount than what has been approved in the plan. If this is the case, the trustee must pay the amount on the claim and not in the payment plan going forward. However, the trustee is not permitted to make changes to the payment plan itself.
If someone files for Chapter 13 bankruptcy, they may not be able to immediately see their payment plan show up on their credit report. A woman in California filed for bankruptcy and successfully submitted a repayment plan in April of 2015. Repayment plans, which are required for Chapter 13 filings, outline how the debtor will pay off certain creditors in a three- to five-year period. Debts that are remaining are normally discharged.
South Carolina residents who are considering filing for Chapter 13 bankruptcy might be interested to learn that in another state, a couple was not permitted to exclude unemployment payments from their current monthly and disposable income. With Chapter 13 bankruptcy, a debtor may keep some assets while paying them off under an approved payment plan. In New Mexico, a couple argued that the unemployment payments should be exempt because they are a benefit under the Social Security Act.
When individuals or married couples file Chapter 13 bankruptcy petitions in South Carolina, they are expected to submit payment plans showing how much income they earn and the portion of this money that will be applied to their outstanding obligations. Checks and balances have been built into the system to make sure that creditors are not taken advantage of, and Chapter 13 payment plans must withstand the scrutiny of a bankruptcy judge. Judges can be difficult to please, and they sometimes raise objections even when all of the parties involved are in agreement.
South Carolina residents may be interested in learning about a recent ruling made by the Fourth Circuit. As a general rule, a borrower cannot modify a lender's claim if it is secured only by his or her principal residence. The court found that escrow fund interest, insurance proceeds or other mortgage earnings were incidental to the lien. Therefore, they were also not subject to any sort of modification in a chapter 13 case.
South Carolina residents who owe money to a collection agency might worry that this will affect their credit score, but there are a number of circumstances in which this is not the case. If an insurance company has paid a person's medical bill or it is within 180 days of the debt, this is not supposed to appear on the credit report.
South Carolina residents who are in the middle of a Chapter 13 bankruptcy case will in most cases need court approval to take on any new debt. Therefore, there is no guarantee that an individual currently taking part in a debt reorganization plan will be able to buy a car. However, there is a process that he or she may go through in an effort to have the new debt authorized by a judge.
A large number of people who fall in the millennial generation are struggling with debts, whether from college loans, a home mortgage or something else. In fact, about 66 percent of millennials are saddled with at least one long-term debt, and it is likely to be a student loan averaging around $40,000. There are several tips that South Carolina millennials who are trying to pay off their debts should follow.