The South Carolina Motor Vehicle Exemption in Bankruptcy
If you file for bankruptcy in South Carolina the motor vehicle exemption protects over $5,000 of your equity in your car (more for married couples).
The South Carolina motor vehicle exemption, which is $5,825 for individuals and $11,650 for married couples, may help you keep your car, truck, van, or other vehicle if you file for Chapter 7 bankruptcy. Here you’ll find information about the South Carolina car exemption: what types of vehicles it covers, how it works for married couples, how to find the applicable statute, and more.
(For more information about exemptions, including how they work and which ones you can use, see our Bankruptcy Exemptions area. For information specific to the motor vehicle exemption, see our Motor Vehicle Exemption in Bankruptcy area.)
The South Carolina Motor Vehicle Exemption and Your Car
South Carolina’s motor vehicle exemption plays a large role in determining whether or not the bankruptcy trustee can take your vehicle to repay your unsecured creditors. If the equity in your car is less than South Carolina’s car exemption, then the trustee cannot sell it. If the equity in your car is significantly more than the applicable exemption amount, the trustee is likely to sell your car to repay your unsecured creditors. For details, see The Motor Vehicle Exemption: Can You Keep Your Car in Chapter 7 Bankruptcy?
Keep in mind that even if your car is safe from the bankruptcy trustee, the lender may be able to repossess your car during or after bankruptcy. To learn more, see Your Car in Chapter 7 Bankruptcy and If You Are Behind on Your Car Payments, Can Chapter 7 Help?
The Amount of South Carolina's Motor Vehicle Exemption
In South Carolina, you can exempt up to $5,825 in equity in your car or other vehicle.
Example. Kyle owns a 2007 Jeep Wrangler worth $8,975. He owes the dealer $3,000 on the loan, so there is $5,975 of equity in his Jeep. If Kyle files a Chapter 7 bankruptcy, he can protect most of the equity in his car with the South Carolina motor vehicle exemption; however, $150 of equity will remain unprotected. The trustee has the right to sell the vehicle or offer Kyle the opportunity to buy out the unprotected amount himself. In this situation, however, the trustee will probably not go after Kyle’s car because $150 would likely be eaten up by the cost of selling the car which means there will be nothing leftover to distribute to Kyle’s creditors.
The Federal Motor Vehicle Exemption
Some states allow bankruptcy filers to use the federal bankruptcy exemptions instead of state exemptions, but South Carolina is not one of these states.
Using South Carolina's Wildcard Exemption to Protect Your Car
If the equity in your car is more than $5,825, you may be able to cover the extra equity by using South Carolina’s wildcard exemption, which allows you to apply unused exemptions from other property to protect your car. If you did not use the full amount of the South Carolina homestead, burial, personal property (household goods, animals, crops, etc.), jewelry, or tools of the trade exemptions, you may apply the remaining value, up to a maximum of $5,825, to protect additional equity in your vehicle.
Example. Kyle paid off the loan on his Jeep worth $8,975. He uses the motor vehicle exemption to protect $5,825 of equity, leaving $3,150 unprotected. He has $5,000 leftover from his homestead exemption, and he can use it to cover the remaining equity and fully protect his Jeep.
Can Married Couples Double South Carolina's Motor Vehicle Exemption?
Some states allow married couples filing a joint bankruptcy petition to double the listed exemption amounts. Married couples can double the South Carolina motor vehicle exemption and protect up to $11,650 of equity in a motor vehicle.
(To learn about the advantages and disadvantages of joint bankruptcy filings, see Nolo's section on Bankruptcy Options for Married Couples).
What Vehicles and Insurance Are Covered by the Motor Vehicle Exemption?
The South Carolina motor vehicle exemption allows you to protect one motor vehicle, such as a car, truck, van, or motorcycle.
South Carolina's Tools of the Trade Exemption
South Carolina has a tools of the trade exemption that allows you to protect up to $1,750 of value in property that you or your dependents use for a profession or trade. If you use your vehicle to carry on your profession, for example, a tow truck, you may be able to protect additional value under this exemption. Note that using your vehicle to commute to and from work will generally not qualify the vehicle as a tool of the trade.
Checking South Carolina's Exemption Laws
You can find South Carolina's motor vehicle exemption at S.C. Code Ann. Section 15-41-30(A)(2).
When the South Carolina Exemption Amounts Are Updated
The exemption laws in South Carolina periodically. In accordance with S.C. Code Ann. 15-41-30(B), the South Carolina exemption amounts will be adjusted on July 1 of even calendar years. The exemption amounts will be adjusted to reflect the southeastern consumer price index for urban consumers, as provided by the United States Department of Labor.