South Carolina Exemption Statute–Happy Birthday!
Happy Birthday!
Written by Spartanburg Bankruptcy Attorney Däna Wilkinson
Not quite two years ago, the combined efforts of a number of South Carolina lawyers and legislators over a period of years paid off. The South Carolina Legislature passed the second of two parts of a comprehensive revision of the South Carolina exemption statute. The statute was amended to significantly increase the amount of property debtors in South Carolina are entitled to claim as exempt. The change drastically affected the rights of debtors and creditors, as well as bankruptcy practice, in South Carolina. For example, before the revision, the South Carolina homestead exemption was $5,000. Now it is in excess of $50,000. The exemption for a vehicle is now a little over $5,000, instead of the former $1,200. And there is an entirely new category, that lawyers call a “wildcard” exemption, that allows you to choose the type of property to claim as exempt.
Here’s how it works, and why it’s important. The term “exemptions” is used to describe the type and amount of property that you are entitled to keep despite the claims of your creditors. So, if property is exempt, it can’t be taken from you to pay your debts, unless you voluntarily pledge it as collateral. In South Carolina, these exemptions apply when any creditor, like a credit card, or medical provider, is trying to collect from you. In South Carolina these exemptions also generally apply to protect specified property in bankruptcy as well.
For example, let’s say you have a house that’s worth $125,o00, and you’ve paid the mortgage down to $100,000. You also owe some credit card bills and medical bills that you can’t afford to pay. Even if those creditors obtain a judgment, they can’t force the sale of your home to pay those debts. Because the South Carolina statute allows you to keep a little over $50,000 in equity in your home as exempt, your home is protected. Other exempt property includes specified amounts of equity in household goods and clothing, a vehicle, some cash, and other types of property as well. And, if you have to file bankruptcy, that property is protected from your bankruptcy trustee as well. Exemptions can also impact a probate estate.
The purpose of any exemption statute is to protect enough property so that you are able to look after yourself and your family, without creditors stripping you of basic necessities. Now, the South Carolina statute comes closer to meeting that ideal. It also provides incentive to pay down the mortgage on your home, as well as to pay down the debt on other collateral, like your car (and maybe drive that car a little longer). Build equity, put money in savings–sounds like a plan, doesn’t it?
The process of revising the statute was lengthy, taking more than two years. But the new South Carolina statute has an automatic adjustment, tied to the rate of inflation, so it shouldn’t get so far out of date again–or at least, that is the hope. Those amounts will be adjusted this July. You may be wondering how much you get to claim as exempt, and why I don’t just tell you. I’ll give you a typical lawyer answer, which is also true: it depends. Who gets to claim an exemption, and how that works, is a complicated question, and the answer changes from time to time. So, if you want to know how much of your property is exempt, consult a lawyer. If you are worried about losing property to a creditor, go see a lawyer who can tell you what’s protected. If you are considering bankruptcy, it’s especially important to consult an experienced lawyer, since the exemptions you are entitled to can be complex, and can depend on such things as how long you have lived in South Carolina. Just know that you are entitled to claim certain property as exempt, and generally in South Carolina those exemptions protect the kinds of things most people need to retain.