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South Carolina Increases Bankruptcy Exemptions

Bankruptcy Lawyer Bryan W. Stone answers the question: “What are my alternatives to bankruptcy?”


A bill that has already been passed by the South Carolina House has now moved forward to the Senate Judiciary Committee and is widely expected to eventually pass the full Senate. The bill does several things, the first of which is to create a specific bankruptcy exemption for guns.


Handgun Charlotte Bankruptcy Lawyer Mecklenburg Debt AttorneyThe bill began when a legislator said that he realized if he were to file for bankruptcy, the lack of exemptions for guns meant that he could lose treasured heirlooms, like a gun once owned by his great-great grandfather. The lawmaker set to work crafting language that would protect those guns from creditors and the original language of the bill said that bankruptcy filers could save three firearms and up to 3,000 rounds of ammunition.


Critics and others feared that the rule could be used by cheats to shield assets, for instance, by buying very expensive antique guns that could then be exempted from bankruptcy and sold for profit later. As a result, the rules were revised and now bankruptcy filers will be able to keep $5,000 worth of guns from creditors. This specific number has been the subject of debate, with some arguing that $5,000 isn’t enough to protect some truly old heirlooms and others claiming that it is too generous.


A previous decision from the U.S. Bankruptcy Court in South Carolina determined that guns don’t fall under the state’s existing bankruptcy exemption for household goods. This puts South Carolina in a similar legal situation as the majority of states. Currently, only 14 states exempt firearms from bankruptcy collection. The NRA has worked hard to expand the use of gun exemptions in bankruptcy cases, arguing that not only could treasured heirlooms be lost, but a person’s right to protect themselves from a criminal attacker.


Beyond the gun exemption, the South Carolina legislature is also tackling an issue related to home exemptions. The bill before lawmakers says that surviving spouses can claim their deceased spouse’s homestead exemption in the event of bankruptcy, effectively doubling the amount they can exempt from creditors. This means that a surviving spouse will be able to shield $118,000 from creditors, increasing the odds that they will either be able to remain in their home following bankruptcy or, at the very least, have enough money to find someplace to start fresh.


Sponsors of the home exemption legislation say they were motivated by the reality that elderly individuals could be turned out of their long-term homes due to sudden financial problems. If a widow amassed medical debt and was forced to file bankruptcy, she would previously only be able to exempt $56,000 of value in her house. This meant that if people filed for bankruptcy while their spouse was alive, the odds of a home being spared were good. If they waited until after the death of a spouse, it became much less likely. The hope is the new language will increase the odds that people remain in their homes despite financial trouble.


If you are contemplating bankruptcy in the Charlotte area, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with legally sound advice for your particular situation.


About the Author

Kyle Frost Bankruptcy Lawyer Student loan attorneyKyle Frost joined Arnold & Smith, PLLC in 2013 where he focuses his practice on all aspects of civil litigation and bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.

Born and raised in upstate New York, Mr. Frost attended the University at Albany on a Presidential Scholarship, graduating magna cum laude with a double major in Political Science and Sociology.  He went on to attended Wake Forest University School of Law in Winston Salem, North Carolina.

Following college, Mr. Frost spent over a year teaching English in South Korea. He worked in a private school in Seoul developing curriculum, English programs, and educating both children and adults that were interested in learning a new language.

In his spare time, Mr. Frost enjoys homebrewing, fishing, and travelling.







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