Top 10 Benefits of Chapter 13 Bankruptcy
If you’re struggling with debt in South Carolina, you may feel like there are no good options left. However, Chapter 13 bankruptcy offers powerful legal protections and long-term financial relief for individuals with regular income. Often called a “wage earner’s bankruptcy,” Chapter 13 allows you to reorganize debt instead of liquidating assets, making it an attractive option for many SC residents.
Below are the Top 10 benefits of Chapter 13 bankruptcy in South Carolina, and why it may be the right solution for your financial situation. This is my list of the top benefits that I have found to be the most beneficial for people in debt.
1. Stop Foreclosure on Your South Carolina Home
One of the most significant benefits of Chapter 13 bankruptcy in SC is the ability to stop foreclosure proceedings immediately.
When you file Chapter 13, the automatic stay goes into effect, which legally halts foreclosure actions by your mortgage lender. Even if your home is scheduled for a foreclosure sale, Chapter 13 can stop it and allow you to catch up on missed mortgage payments over 3–5 years.
This is especially important in South Carolina, where foreclosure timelines can move quickly once a lawsuit is filed. In my experience, Chapter 13 bankruptcy may be a homeowners’ last and best chance at saving their home from foreclosure – especially if a person is days or even hours away from the sale of a home.
2. Catch Up on Mortgage Arrears Without Losing Your Property
Chapter 13 allows South Carolina homeowners to repay past-due mortgage payments gradually, while continuing to make regular monthly payments going forward.
Instead of paying a lump sum to reinstate your mortgage, your arrears are rolled into a court-approved repayment plan, making it far more manageable.
3. Protect Your Car from Repossession
If you’re behind on car payments, Chapter 13 bankruptcy can stop repossession immediately.
In many cases, you can:
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Keep the car and pay the total car loan through the Chapter 13 plan.
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Reduce interest rates on older vehicles. This can offer huge savings as many car loans are higher than 10, 15, or 20 percent. The current Chapter 13 interest rate in the South Carolina Bankruptcy Court for Chapter 13 plans is 8.5%
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Pay only the vehicle’s current value (often called “cramdown“) rather than the full loan balance (in some situations). This is a valuable tool mostly for loans older than 910 days. A Debtor can propose to pay only the value of the car rather than pay the car balance which often times is much higher.
For South Carolina residents who rely on their vehicle for work, this protection is critical.
4. Consolidate Debt into One Affordable Monthly Payment
Chapter 13 bankruptcy in SC works like a court-supervised debt consolidation plan.
Instead of juggling multiple bills, you make one monthly payment to a SC Chapter 13 trustee, who then distributes payments to creditors according to the approved plan.
This simplifies finances and provides predictability during a stressful time.
5. Eliminate or Reduce Unsecured Debt
Many unsecured debts—such as:
may be reduced or eliminated entirely in a Chapter 13 case.
In South Carolina, many filers repay only a fraction of their unsecured debt, with the remainder discharged at the end of the plan.
6. Stop Wage Garnishments and Lawsuits
Once you file Chapter 13 bankruptcy in South Carolina, the automatic stay:
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Stops wage garnishments, In South Carolina, even though we do not have consumer wage garnishment, there are plenty of other ways a person can have his or her wages garnished to include IRS taxes, child support, SC Gear Program debts, and credit card judgements from outside the state.
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Halts creditor lawsuits
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Freezes bank account levies
This protection gives immediate breathing room and prevents creditors from taking further legal action while your case is pending.
7. Protect Co-Signers on Consumer Debt
Chapter 13 offers a unique benefit not available in Chapter 7: the co-debtor stay.
If a family member or friend co-signed a consumer debt (such as a car loan), Chapter 13 bankruptcy can prevent creditors from pursuing the co-signer, as long as the debt is included in your repayment plan.
8. Keep More Assets Using South Carolina Exemptions
South Carolina bankruptcy exemptions are relatively generous and work especially well with Chapter 13.
Unlike Chapter 7, Chapter 13 allows you to:
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Keep non-exempt property
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Pay creditors the value of non-exempt assets over time
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Avoid forced liquidation of valuable property
This makes Chapter 13 ideal for SC residents with equity in their home or other assets they want to protect.
9. Get Time to Pay Back Priority Debts
Certain debts—such as:
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Child support arrears
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Alimony
are considered priority debts and cannot be discharged. However, Chapter 13 allows South Carolina filers to repay these obligations over time, often without additional penalties or collection actions.
10. Create a Clear Path to Financial Recovery
At the end of a successful Chapter 13 bankruptcy plan:
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Remaining eligible debts are discharged
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You are current on secured and priority debts
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You have a structured foundation for rebuilding credit
Many South Carolina filers see credit improvement even during the repayment period due to consistent payments and reduced debt-to-income ratios.
Is Chapter 13 Bankruptcy Right for You in South Carolina?
Chapter 13 bankruptcy is ideal for individuals who:
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Have regular income
- Unsecured debts are below $526,700
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Want to keep their home or car
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Are behind on mortgage, car, or tax payments
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Need time and structure to regain financial stability
Because bankruptcy laws are federal but exemptions and procedures vary by state, working with an experienced South Carolina bankruptcy attorney is essential to maximizing the benefits of Chapter 13.
Final Thoughts
Chapter 13 bankruptcy in South Carolina is not about failure—it’s about financial reorganization and protection. With the right plan and legal guidance, it can help you save your home, protect your income, and regain control of your financial future.
If you’re overwhelmed by debt, understanding your Chapter 13 options may be the first step toward lasting relief. Feel free to call the Stone Law Firm today to set up a free bankruptcy consult!