South Carolina legislators have cleared the way for more consumers who are overwhelmed with credit card and other consumer debt to begin filing bankruptcy.
A new new South Carolina bankruptcy law allows for more money and higher property values to be exempt from creditors who seek to recover debts.
The South Carolina Online reported that the new bankruptcy guidelines have already gone into effect in South Carolina.
The new South Carolina state law will allow more people to have their burden of debt erased by filing bankruptcy.
Chapter 7 discharges debt, and the new South Carolina bankruptcy law broadens the class of people who will now be allowed to file Chapter 7 bankruptcy.
People filing under Chapter 13 will also be helped by the new law. Under Chapter 13 bankruptcy, debts are restructured and the consumer is required to repay them.
Under the new South Carolina bankruptcy law, the monthly payments for people who have filed Chapter 13 bankruptcy could be reduced, making them easier to manage.
In keeping with the nationwide trend of an increased number of people filing bankruptcy, South Carolina has seen a surge in recent bankruptcy filings as the U.S. economy has continued to sink.
The decision by South Carolina legislators to make changes to the state bankruptcy laws in favor of debtors came as a pleasant surprise to many bankruptcy lawyers in the state.
South Carolina has always had bankruptcy laws which were unfavorable to consumers and often did not protect assets from being seized by bankruptcy trustees.
South Carolina Governor Mark Sanford had vetoed the bill, but both houses of the General Assembly voted to override his veto with an unanimous vote in the state Senate and a 78-26 vote in the House.
In his veto, Sanford explained that he opposed the law because it does not differentiate between people who file bankruptcy due to reckless financial decisions and those who file bankruptcy as a result of the devastating financial effects of serious illness or unexpected layoffs.
Sanford had concerns that the law would create higher credit costs for people who had been responsible in their spending.
According to statistics reported by the American Bankruptcy Institute, the number of people filing bankruptcy in South Carolina declined by 67 percent from the fourth quarter of 2005 when the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) went into effect, to the first quarter of 2006.
However, since the economy has worsened and continued in a free-fall, the number of people filing bankruptcy has risen steadily in each quarter over the past two years.
Under the old South Carolina bankruptcy guidelines, people filing bankruptcy seeking Chapter 7 protection could only shelter $1,000 in cash, $1,200 in automobile value, $750 in tools of trade, $2,500 in home furnishings and $500 in jewelry.
However, the new bankruptcy laws in South Carolina will allow those filing bankruptcy seeking Chapter 7 protection to shelter $5,000 in cash, $5,000 in automobile value, $1,500 in tools of trade, $4,000 in household furnishings and $1,000 in jewelry with doubled values for those who jointly file bankruptcy.
Under the old bankruptcy laws, the bankruptcy trustee could seize much more property to liquidate in order to pay debts.
The new higher limits for cash and property will allow people filing bankruptcy to retain more of their property and may also allow more people to go forward with filing bankruptcy for Chapter 13 protection.
Under the old laws, many people who owned cars worth more than $1,200 opted not to file bankruptcy in order to keep their vehicles. The new bankruptcy guidelines in South Carolina will allow many more people to file bankruptcy while not being forced to forfeit their vehicles to bankruptcy trustees.