South Carolina law protects cash surrender value from seizure, whether you are being pursued by a creditor in South Carolina Courts or a Trustee or creditor if you have filed for bankruptcy under Chapter 7, Chapter 11 or Chapter 13 of the United States Bankruptcy Code. It is sometimes confusing as to where and what exemptions apply in a bankruptcy case as some exemptions come from South Carolina Law and some exemptions are part of the Federal Law. Some Federal exemptions apply in South Carolina court cases and some do not apply.
This is another reason why I regularly say to people, you need a knowledgeable person to represent you in a bankruptcy case and in a South Carolina collection case. Creditors hire attorneys because they believe that they will receive more when they hire an attorney. If you do not know your rights, the creditor may when by default. There are simply so many exemptions and the exemptions are constantly being changed or modified. Trying to “do it yourself” or having someone who file bankruptcy cases on an irregular basis is not who you should have to represent you.
South Carolina Code of Laws 38-63-40 exempts both the cash surrender value or proceeds from an individual insurance policy as long as the policy was purchased more than two years before an insured files for bankruptcy and the policy is for the benefit of the insured’s spouse, children or dependents.
If you are not filing bankruptcy and a creditor is trying to obtain the cash value of the policy in a South Carolina collection proceeding, it is unclear as to what is the effect of the policy being more or less than 2 years old on that case.
Once again, it is very important that you make sure that you meet with someone qualified to give you advice on this issue. Filing bankruptcy is not always the best way to resolve your debts. I have seen people lose assets in both South Carolina Courts and Bankruptcy Court that proper planning would have protected.