What Are the South Carolina Bankruptcy Exemptions?

What are the South Carolina bankruptcy exemptions and why are they important in a Chapter 7 bankruptcy? 

When thinking about filing bankruptcy, many individuals are concerned that they’ll be required to sell their personal property to repay their creditors. It is true that the Bankruptcy Court does allow a bankruptcy trustee assigned to an individual case to sell a filer’s nonexempt property. However, filers may apply bankruptcy exemptions to most or all of their property to save their assets from the risk of being sold. If you’re filing for bankruptcy, make sure to carefully claim every South Carolina exemption that applies to the types of property you own. That way, you won’t have to unnecessarily sacrifice your hard-earned assets for the benefit of your creditors. In this guide, you’ll learn about all of the state exemptions that South Carolina offers to Chapter 7 bankruptcy filers.

Does South Carolina allow the use of federal bankruptcy exemptions?

Only 17 states allow their residents to choose between claiming state exemptions and federal bankruptcy exemptions. South Carolina is not one of these states. Instead, South Carolina law provides residents with state-specific exemptions and does not allow its residents to claim federal exemptions.

While some federal law in the Bankruptcy Code does influence how some South Carolina exemptions are structured, the kinds of exempt property filers can claim and the exemption amounts that apply to bankruptcy cases are state-specific. It’s important to note that if you have lived in South Carolina for less than 2 years, you may not be able to claim South Carolina’s exemptions to your property.

South Carolina Bankruptcy Exemptions

If you are married and you and your spouse have chosen to file bankruptcy jointly, you may (unless otherwise noted) double the exemption amounts listed below. Essentially, South Carolina law allows each spouse to claim a full set of exemptions, provided that the property being exempted is co-owned. If only one spouse owns a specific asset, the exemption amounts concerning that specific property may not be doubled.

Please keep this in mind as you start to calculate the exemption values that you’ll be able to take advantage of as a married couple when filing jointly.

Real Property - the South Carolina Homestead Exemption

The homestead exemption allows homeowners and owners of other specific types of real property to safeguard a certain amount of equity invested in real estate. In this context, “equity” represents the amount of money you’ve already paid for your property, in contrast to the value of the property itself or any outstanding balance on a real property loan.

For example, say that you took out a home loan worth $75,000 to finance the purchase of your primary residence. Over time, you’ve been able to pay $25,000 on that loan and a $50,000 balance remains outstanding. Your equity in your home is represented by the $25,000 you’ve already paid on the loan. If you can exempt the equity in your home and you’d like to continue making payments on your loan so that you can keep your home, the Bankruptcy Court will likely allow you to do so as long as you weren’t behind on payments when your case was filed.

The South Carolina homestead exemption is currently valued at up to $60,975 of equity in a homestead. Married couples filing jointly who co-own their primary residence may exempt $121,950 in equity. If you don’t own your home, you may use this exemption to safeguard your equity in a burial plot valued up to $59,100 for a single filer.

Personal Property Exemptions

Just as the homestead exemption safeguards the equity in a filer’s primary residence (or burial plot), South Carolina permits the exemption of a certain amount of equity in a single motor vehicle. Specifically, a single filer can claim up to $6,100 of equity in one motor vehicle and a married couple filing jointly can double that equity amount for a shared primary vehicle.

South Carolina doesn’t offer terribly generous personal property exemptions. However, the South Carolina Bankruptcy Code does offer a generous wildcard exemption that you can use to exempt other personal property not listed below. The wildcard exemption is explained under the “Other South Carolina Exemptions” section of this guide. Generally speaking, South Carolina offers filers the following personal property exemptions (please double values if married and filing jointly):

• Guns (up to three rifles, shotguns, and/or pistols for single filers not to exceed $3,000 in total value)

• Health aids (total value)

• Implements and tools of the trade (up to $1,825 in total value)

• Jewelry (up to $1,225 in total value)

• Up to $4,875 total value - Animals, appliances, books, clothing, crops, furnishings, household goods, and musical instruments

Money Benefits

In addition to safeguarding personal property, South Carolina exemptions protect several kinds of monetary assets, benefits, and insurance-related coverage. Unless otherwise noted, the following assets may be exempted at their full value under state law:

• Accident and disability benefits

• Alimony

• Child support

• College investment program trust fund

• Crime victims’ compensation

• Disability and/or illness benefits

• ERISA-qualified benefits

• Fraternal benefit society benefits

• General relief; aid to blind, aged, and disabled

• Group life insurance proceeds' cash value (up to current maximum value as outlined in 38-63-40)

• IRAS and Roth IRAs to maximum allowed under 11 U.S.C. § 522(b)(3)(C)(n)

• Life insurance coverage (for filer’s spouse and dependents, up to $50,000 – excluding policies purchased within the 24 months prior to filing for bankruptcy)

• Life insurance dividends, interest, loan, cash, or surrender value from a policy for someone that the filer depended upon (up to $4,875)

• Life insurance proceeds from a policy for someone that the filer depended upon (which is necessary for support)

• Life insurance proceeds if policy prohibits these benefits being used to pay creditors

• Local public assistance

• Personal injury recoveries

• Public employee pensions (including those for firefighters, general assembly members, judges, law enforcement officers, and solicitors)

• Social Security benefits

• Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans) as outlined under 11 U.S.C. § 522

• Unemployment compensation

• Unmatured life insurance contract (not credit insurance policies, as these are not exempt)

• Veterans’ benefits

• Workers’ compensation

• Wrongful death recoveries for someone the filer depended on for support

Other South Carolina Exemptions

South Carolina allows filers to take advantage of a wildcard exemption. This is a very useful provision if you own property that either doesn’t fit into any of the categories listed above or if the value of some of your property exceeds the limits imposed by the law. Once you’ve completed claiming all the exemptions available to you, you can use the wildcard exemption to safeguard an additional $6,100 in property value or equity if you’re a single filer or $12,200 if you’re filing jointly with your spouse.

Additionally, if you don’t need to use the homestead exemption to safeguard a primary residence, you may exempt up to $5,900 in cash in addition to the value of a burial plot as explained above.

Finally, if you are part of a formalized business partnership, know that South Carolina generally exempts business partnership property in personal bankruptcy filings.

Filing Chapter 7 Bankruptcy? 

If this information is a little overwhelming, don’t panic. There are resources available that will allow you to access professional help when you’re sorting out your bankruptcy exemptions and any other concerns you may have about the South Carolina Chapter 7 bankruptcy process. Most law firms allow potential clients to schedule free consultations with their bankruptcy attorneys. Even if you don’t end up hiring a bankruptcy lawyer to help you file your case, you can take advantage of a free consultation to ask any questions you may have about bankruptcy law generally, South Carolina bankruptcy exemptions specifically, and whether Chapter 7 or Chapter 13 bankruptcy is the best option for your situation. Upsolve can help you to connect with an experienced bankruptcy law firm located in your community. If you can’t afford the services of a bankruptcy attorney, Upsolve may be able to help you file your Chapter 7 bankruptcy case at no cost.