Filing for Bankruptcy in South Carolina (SC)

If you're struggling with overwhelming debt in South Carolina, you likely feel alone. But facing financial challenges isn't a unique experience, and in many cases, filing for bankruptcy can provide a fresh start. Whether you're considering Chapter 7 or Chapter 13 bankruptcy, this comprehensive guide can help. It answers common questions about South Carolina's exemptions, eligibility requirements, and the step-by-step process so you can move forward with confidence.

South Carolina Bankruptcy Eligibility 2025: Means Test for Chapter 7 and Chapter 13

Bankruptcy is often an excellent option for individuals seeking debt relief. It works by unwinding the contracts between you and your creditors, eliminating your responsibility to pay, and providing a fresh financial start.

Six Signs You Should File for Bankruptcy in South Carolina

Bankruptcy provides immediate relief through the "automatic stay," which stops most collection actions as soon as you file. It might be the right solution if you're experiencing:

• overwhelming debt you can't pay despite budgeting and cutting expenses
• creditor harassment through calls, letters, or lawsuits
• wage garnishment or threats of asset seizure
• risk of home foreclosure or car repossession
• medical debt from illness or injury, or
• job loss or reduced income makes debt payments impossible.

Alternatives to Bankruptcy in South Carolina: What to Try First

Bankruptcy isn't the right choice for everyone. If you haven't had success with budgeting and cutting expenses, it's a good idea to try debt consolidation, negotiation with creditors, or credit counseling first. But if these bankruptcy alternatives don't offer the relief you need, bankruptcy is likely a good choice.

Which Bankruptcy Chapter Is Best for South Carolina Residents?

Your most significant decision is determining whether Chapter 7 or Chapter 13 offers the best solution. This simple table should help get you started.

South Carolina Quick Chapter Comparison Chart 2025

South Carolina Chapter 7 Bankruptcy Timeline: What to Expect

The primary benefit of Chapter 7 is that it provides a quick path to debt erasure. It works well for individuals with limited income and few valuable assets.

• Process. Typically takes three to six months to complete.
• Debt elimination. Erases or "discharges" most unsecured debts, like credit card balances, medical bills, and personal loans, without requiring a repayment plan.
• Property loss. You might lose "nonexempt property" or assets not protected by South Carolina's bankruptcy exemptions. The Chapter 7 trustee sells unnecessary property, usually luxury items or assets, when the value exceeds exemption limits.
• No catch-up plan. You don't repay debts in this chapter. But because it doesn't offer a payment plan, you can't catch up on late mortgage or car payments. So you could lose your home or financed vehicle if you are behind on the loans when you file.

Tip—take the quiz. This short Chapter 7 bankruptcy quiz will help you learn more about whether Chapter 7 will work for you.

Key Features of Chapter 13 Bankruptcy in South Carolina

Chapter 13 lets you keep all property while repaying debts through a structured repayment plan. It requires a regular income to fund the lengthy repayment plan.

• Debt repayment. Involves a three- to five-year repayment plan.
• Property protection. Allows you to keep all your property, including nonexempt assets.
• Save a home or a car. Offers strategies to catch up on late mortgage or car payments, potentially saving your home from foreclosure or your car from repossession.
• Manage nondischargeable debts. Lets you force creditors into a payment plan and repay "nondischargeable debts" that bankruptcy won't erase over time.
• Potential downside. Monthly plan payments can be high, making it unaffordable for some.

Tip—try the payment calculator. This Chapter 13 payment calculator can help you determine the minimum Chapter 13 payment you'd have to afford to qualify.

Chapter 7 vs. Chapter 13 Bankruptcy in South Carolina: Which Should You Choose?

Now that you understand the basics, you're ready to take a deeper dive into the differences between the two chapters. You might want to refer to the following table while learning about the steps involved in assessing your debts, property, and qualifications.

Steps to Help Determine Which Bankruptcy Chapter to File in South Carolina

The three primary financial areas you'll be considering are your debts, assets, and qualifications. If you're not sure which chapter to file after the analysis—which can happen because the chapters offer different benefits—a local bankruptcy lawyer can provide personalized advice.

1. Which Debts Can Be Eliminated in South Carolina Bankruptcy?

You'll want to ensure that filing for bankruptcy will eliminate enough debt to make it worthwhile, especially if you're considering filing for Chapter 7. The following are typically dischargeable—or the debts you can erase:

• credit card balances
• medical bills
• personal loans and lines of credit
• past-due utility payments
• rent and lease debt
• business debts
• deficiency balances from foreclosure or repossession, and
• mortgage or car payments if you're willing to surrender the car, house, or other property securing the debt.

But not all debts can be eliminated in bankruptcy. These are common nondischargeable debts—the type you can't erase:

• domestic support obligations, such as child support and alimony
• most recent tax debts (some older income taxes can be discharged if they meet specific timing and filing requirements)
• criminal fines and debts incurred through fraud or intentional injury, and
• recent luxury purchases or cash advances.

Tip about student loans. These are notoriously difficult to discharge. To eliminate student loan debt in bankruptcy, you typically need to file and win a separate lawsuit in court, proving "undue hardship." However, in 2023, steps were taken to ease the student loan discharge process, and a new student loan bankruptcy form was introduced.

Chapter Selection and Debts: Summary

• Chapter 7 is a good choice when all or most of your debts are dischargeable, and the amount is more than you could repay in a reasonable time.
• Chapter 13 works well if you need time to repay nondischargeable debts. It allows you to force creditors into a payment plan, enabling you to repay the balance over three to five years.
• If you're behind on mortgage or car payments and wish to keep your home or vehicle, Chapter 13's repayment plan allows you to catch up on missed payments over time and prevent foreclosure or repossession. Chapter 7 filers typically lose financed homes and cars to the lender if the payments are delinquent when they file.

2. Protecting Your Assets: South Carolina Bankruptcy Exemptions Explained

South Carolina's exemption laws play a significant role in determining what property you can keep.

• Exempt property. You keep assets protected by specific bankruptcy exemptions.
• Nonexempt property. In Chapter 7, nonexempt property is sold for the creditors. In Chapter 13, you can keep nonexempt property by paying its value in your repayment plan.
• Residency. To utilize South Carolina's bankruptcy exemptions, you must have resided in the state for at least 730 days. If you've moved more recently, you might need to use the exemptions from your previous state of residence.

South Carolina Bankruptcy Exemptions 2025: Complete Property Protection Chart

Chapter Selection and Property: Summary

• If you possess significant nonexempt property that you are unwilling to surrender, Chapter 13 is the preferred option. It allows you to retain these assets by incorporating their value into your repayment plan.
• Chapter 13 can provide a mechanism to save your home by allowing you to make up missed payments and restructure your debt, an option not available in Chapter 7.
• It's also the better choice if you're behind on a mortgage or car loan and want to keep the home or car.

3. Income Requirements and Means Test for South Carolina Bankruptcy

Your eligibility for Chapter 7 or Chapter 13 bankruptcy depends on several factors, including your income, debt levels, and previous bankruptcy filings.

The steps you'll need to take will depend on whether your income falls below or above your state's median income. The U.S. Trustee Program "Means Testing" page has current amounts.

Income below median. If your gross yearly family income is below South Carolina's median income for your family size, you will likely qualify for Chapter 7. As of May 15, 2025, you would be eligible at or below the following limits:

• $61,635 for a one-person household
• $77,674 for a two-person household
• $89,568 for a three-person household, and
• $103,821 for a four-person household.

Income above median. If your gross family income exceeds the median, an additional "means test" calculation is necessary to determine your eligibility. This test assesses your disposable income to see if you have the ability to repay a portion of your debts.

Tip. The means test looks at the prior six months of income. If your current income and expenses reveal that you can afford to repay some debt, you won't qualify for Chapter 7. Expect the trustee to evaluate this when reviewing your paperwork.

Chapter 13 Requirements

A fundamental requirement for Chapter 13 is having a regular income source to fund your repayment plan. Also, your total debt must fall within specific limits, which are updated periodically. Check the Chapter 7 vs. Chapter 13 chart above for amounts.

Additional Eligibility Requirements for both Chapters 7 and 13

Regardless of the chapter you choose, you are required to complete a credit counseling course from an approved agency within 180 days before filing for bankruptcy. Also, if you have previously filed for bankruptcy, specific waiting periods apply before you can receive another discharge.

For Chapter 7, you must wait 8 years after a previous Chapter 7 discharge or 6 years after an earlier Chapter 13 discharge. For Chapter 13, you must wait 4 years after a previous Chapter 7 discharge or 2 years after an earlier Chapter 13 discharge.

Chapter Selection and Qualifications: Summary

• If your income is low, you have few assets, and you successfully pass the Chapter 7 means test, this chapter offers a quicker and more straightforward path to debt discharge without the need for a repayment plan.
• If your income is too high to qualify for Chapter 7, but you have a stable, regular income, Chapter 13 might be your only viable option.
• If your total debt exceeds the limits set for Chapter 13, you wouldn't be eligible to file under this chapter.

How to File Bankruptcy in South Carolina in 2025: Step-by-Step Process

1. Gather documents.
2. Complete credit counseling.
3. Prepare and file bankruptcy forms.
4. Attend the creditors' meeting.
5. Complete financial management course.
6. Receive discharge.

1. Gather Your Documents

You'll need the following to prepare your petition.

Tax Returns

• two years for Chapter 7 (the most recent for the trustee)
• four years for Chapter 13, or
• order tax transcripts.

Proof of Income (Six Months)

• paycheck and unemployment benefits stubs
• other proof of income, such as rental income, or proof of domestic support payments, and
• small business owners filing for bankruptcy need two years of yearly profit and loss statements and one year of monthly profit and loss statements.

Financial and Billing Statements (Two Months)

• bank account, investment, and retirement statements
• credit card and other billing statements, and
• collection notices.

Identification

• driver's license, I.D. card, government I.D., or passport
• Social Security card or proof of Social Security number, or
• obtain the necessary I.D. or find out what alternatives the trustee will accept as proof.

Additional Documents

• mortgage and car loan statements
• property list with values (group small items together, such as clothing, cookware, and bedding)
• home, car, and other valuations (Realtor.com; Zillow; Nada.com; Kelley Blue Book; eBay)
• repair estimates for damaged property
• photographs of unusual items and damaged property
• liability insurance policies
• credit report (annualcreditreport.com)
• marital settlement agreements, and
• other documents reasonably related to your financial affairs.

Tip. Make extra copies. You'll need to forward copies of some documents to the trustee after you file. Also, taking copies to your legal consultation will help the lawyer properly evaluate your case.

2. Complete Credit Counseling

You must complete a credit counseling course before filing for bankruptcy. You have 180 days before filing to complete the course. It typically lasts 60 to 90 minutes and costs $25 to $50. Go to the "Credit Counseling and Debtor Education Information" webpage on the U.S. Trustee Program website.

3. Prepare and File Bankruptcy Forms

You'll pay the filing fee or submit a fee waiver or installment payment request when you're ready to file the petition. File the petition in the proper South Carolina federal bankruptcy court. Courts are in Columbia, Charleston, and Spartanburg. (scb.uscourts.gov.)

The fillable, downloadable official bankruptcy forms you'll complete are available on the U.S. Courts bankruptcy forms webpage. Once you file, the automatic stay—the order that stops most collection actions—goes into effect.

4. Attend the 341 Meeting of Creditors

The 341 meeting of creditors is the one meeting all filers must attend. The court will send a notice of the bankruptcy filing that includes the trustee's name and the date of the 341 meeting of creditors hearing.

• the meeting usually occurs three to five weeks after filing
• most are held virtually, but could be in person
• the trustee will ask questions about your case, and
• creditors can attend, but rarely do.

Tip. You'll provide the trustee with copies of bank statements, paystubs, and tax returns at least seven days before the meeting. (11 U.S.C. § 521.) Account balances should be current as of the day you file, so the trustee can verify your right to keep cash in bankruptcy.

5. Complete the Financial Management Course

You must complete a "debtor education" course after filing and submit the certificate to receive the discharge. In Chapter 7, you'll have about 60 days after the meeting of creditors. In Chapter 13, you'll file it before the last plan payment.

Tip. If the court dismisses your case because you failed to file the certificate, you'll need to repay the filing fee and submit it to receive your discharge.

6. Receive Your Debt Discharge

After completing all the required steps, you will receive your debt discharge, which will provide you with a fresh financial start. Chapter 7 filers typically receive their discharge 60 to 90 days after the meeting of creditors. Chapter 13 filers receive it after completing their repayment plan (the Chapter 13 discharge erases remaining balances on qualifying debts).

Additional Steps for Chapter 13

The court determines whether to "confirm" or approve your proposed repayment plan at a confirmation hearing. Once confirmed, you must complete the payment plan by making monthly payments over three to five years. Before receiving the discharge, you'll verify up-to-date support obligations and address other issues as required by local jurisdictional requirements.

South Carolina Bankruptcy FAQs 2025: Costs, Credit Impact, and Property Protection

Here you'll find answers to common questions about South Carolina bankruptcies.

Can I keep my car if I file for bankruptcy in South Carolina?

You can keep a vehicle if your equity is within the exemption limit. If it's financed, you must be and stay current on payments in Chapter 7. You can catch up on missed payments and keep your car in Chapter 13.

Will I lose my house in bankruptcy in South Carolina?

All home equity is protected in South Carolina, so if you stay current on payments, you should be able to keep your house in Chapter 7. If you're behind on payments, Chapter 13 allows you to catch up and keep your home.

Will I lose everything I own in a South Carolina bankruptcy?

No. South Carolina's exemptions allow many filers to keep all their property.

Can I file bankruptcy again if I've filed before?

Yes, but waiting periods apply. You must wait eight years between Chapter 7 filings. The time is reduced to six years if you choose to file for Chapter 13 after filing for Chapter 7.

How much does bankruptcy cost?

You'll pay filing fees, counseling and debtor education course fees, as well as attorney costs, which vary according to the bankruptcy chapter and case complexity. A Chapter 7 case typically ranges from $1,800 to $3,500. You'll likely pay $3,500 to $5,000 for Chapter 13. Chapter 7 costs must be paid in full before filing. However, legal fees can be included in the Chapter 13 plan.

How long does bankruptcy stay on my credit report?

Chapter 7 remains on your credit report for up to 10 years. Chapter 13 stays on your credit report for seven years. However, the impact diminishes over time, and many people see credit improvement within a year or two.

How to Rebuild Credit After South Carolina Bankruptcy: Timeline and Strategies

Bankruptcy provides a financial reset, offering a fresh start. Most filers can work to improve their credit within a couple of years. It's even possible to qualify for a mortgage two to four years after discharge.

Protect Your Fresh Start

• Don't fall back into old spending habits.
• Take on only necessary debt.
• Create and stick to a budget.
• Build positive payment history.
• Track your progress and dispute errors.
• Keep credit utilization low.
• Build an emergency savings.

Timeline for Credit Recovery

In six months, credit scores begin stabilizing, and you might receive credit card offers. In one to two years, renting an apartment and opening bank accounts should become easier. In two to four years, the interest rates offered on loans should begin to improve, and you might qualify for a mortgage. In seven to ten years, the bankruptcy notation will be removed from credit reports.

South Carolina Bankruptcy Attorney: When You Need Legal Help

People with simple cases are often successful in filing for bankruptcy without an attorney. However, because the process is complex, most people find it worthwhile to seek counsel when filing for bankruptcy—and the fees are relatively reasonable.

Need More Bankruptcy Help?

Did you know Nolo has made the law accessible for over fifty years? It's true—and we wholeheartedly encourage research and learning. You'll find many more helpful bankruptcy articles on Nolo's bankruptcy homepage. However, online articles and resources can't address all bankruptcy issues and aren't written with the facts of your particular case in mind. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.