Image by flickr user danesparzaImage by 20080613banruptcy.jpg Chop through the debt: A new state law allows people who file for bankruptcy to shield more belongings from creditors.
A new law allows people that declare bankruptcy to shelter more of their personal assets.
TotalBankruptcy highlights some of the changes:
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 laws, the bankruptcy trustee could seize much more property to liquidate in order to pay debts.
Also, the amounts debtors can shield from collectors will adjust to inflation. Every other year the limits will be adjusted to the Southeastern Consumer Price Index.
In 2006, lawmakers increased the protection on homes to $50,000.
The law was vetoed by Governor Sanford, but was overridden with a unanimous Senate vote and a 78-26 House vote. Governor Sanford said the bill did not got far enough to distinguish between people who "been dealt a bad card in life" and those "expecting good times to always roll."
But an Associated Press story points out that no state makes such distinctions:
In Texas, for example, (bankruptcy attorney George Cauthen) said debtors can exclude up to 1,000 acres of ranch land; all homes in Florida are exempt, regardless of the debtors' equity or the home's value.