What is bankruptcy?

Bankruptcy is a legal process that allows a person or business to obtain debt relief. In a nutshell, it is a way for people who are overwhelmed with debt to have their debt reduced, restructured, or eliminated. Bankruptcy is generally declared when one can no longer make payments due to the amount of debt they have. In South Carolina, the process for declaring bankruptcy is governed by the United States Bankruptcy Code. Depending on the type of bankruptcy and individual filing situation, a person can either choose from Chapter 7, Chapter 11, or Chapter 13 of the Bankruptcy Code. Chapter 7 bankruptcy is often referred to as “straight bankruptcy”. It allows for certain debts, such as credit card debt, to be eliminated. This type of bankruptcy requires you to give up any non-exempt assets in exchange for a release from the debt. Chapter 11 bankruptcy allows businesses to continue operations while they restructure their debt. In this type of bankruptcy, the court will set up a payment plan that allows for debts to be paid over time. Finally, Chapter 13 bankruptcy is a type of repayment plan. It is designed to help individuals who have income but cannot pay all their bills due to high debt. In this situation, the debtor creates a plan that will allow them to pay all or some of the debt over a period of three to five years. Overall, bankruptcy can help those who are in financial difficulty find a way out without continuing to suffer from the debt burden. It is important to research and understand the process of bankruptcy in South Carolina prior to declaring it.

Related FAQs

Do I need to list all of my debts when filing for bankruptcy?
Is bankruptcy a public record?
Are there restrictions on my ability to travel while filing for bankruptcy?
Are there any debts that cannot be discharged in bankruptcy?
What are some of the potential pitfalls to filing for bankruptcy?
Is there a deadline for filing for bankruptcy?
What debts are dischargeable in bankruptcy?
What are the restrictions for filing for bankruptcy?
How does the bankruptcy court decide which creditors will get paid?
Are there any assets that I will not be able to keep in bankruptcy?

What is bankruptcy?

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