DID THE CHANGES IN BANKRUPTCY LAW AFFECT CHARLESTON, SC DEBTORS
Congress changed the bankruptcy laws and those changes went into effect on October 17, 2005. Those changes were designed to keep out of bankruptcy dishonest people and people who simply made too much money to be granted a straight or Chapter 7 bankruptcy. The thrust of the changes was to force more people to file under other chapter of bankruptcy where some money was repaid to the creditors.
A debtor filing in South Carolina would rarely see much change in the before and after October 17, 2005 bankruptcy practice. In fact, if Congress had simply said that the system should work nationally the way the system worked in South Carolina, a lot of crying and wailing could have been avoided. The bottom line is that the Bankruptcy Court was neither blocked or closed in South Carolina.
Examples of how Congress fixed what should not have been a problem in the first place was an issue with repetitive filings. A debtor would file a Chapter 13 case to stop a foreclosure, but, make no attempt to formulate a plan of reorganization that would pay the missed payments over a period of time and then resume the regular mortgage payments. In some districts, a debtor could file a bankruptcy case, let it get dismissed, file another bankruptcy case and let it be dismissed and on and on. This caused creditors who were owed money to not be able to complete collection actions and allowed debtors to not pay any part of the money that was owed or attempt to get any resolution of the problem.
The District of South Carolina had a simple, but, effective way to stop these types of filings when a debtor could not or would not follow through on bankruptcy filings. After the first filing, if the case was dismissed, the debtor would be allowed to file a second case. However, if that case was dismissed for any reason, the debtor could not file a third case for six months. During that time, a creditor could move forward with its actions to enforce the contract such as completing a foreclosure.
The other thing that was changed was that Congress believed that persons who had the ability to make payments in a Chapter 13 to creditors were filing Chapter 7 bankruptcy cases. Once again, the District of South Carolina was already requiring debtors who could pay a reasonable amount to their unsecured creditors to file Chapter 13. Congress put together something called the means test to try and stop the filing of Chapter 7 cases when a debtor could afford to pay money to their unsecured creditors.
South Carolina has never been a District that let debtors take advantage of the system. Bankruptcy is for honest debtors who need to do something so that they can get their life going again. If you want to find out how the changes in the bankruptcy laws will affect you, call my office at 843-571-4042 to schedule an appointment to come in and discuss how bankruptcy would affect you and your financial situation.