Bankruptcy is a legal process allowing an individual or business to have some or all of their debt absolved. It is almost always considered as a last resort because it can have some negative long-term consequences which must be considered, even if you eventually decide that they are outweighed by the benefits. Bankruptcy is a formation of federal law, and goes through federal courts. Therefore, the process governing bankruptcy in South Dakota will be roughly the same as it is everywhere else in the U.S. But individual courts have different rules for what property is exempt, so you should consult a local Sioux Falls, South Dakota before you file.
Chapter 7 Bankruptcy in Sioux Falls, South Dakota
There are 2 common forms of consumer bankruptcies in Sioux Falls, South Dakota: Chapter 7 and Chapter 13 bankruptcy. Chapter 7 states that a certain percentage of the debtor's property be liquidated to pay off at least a small part of their debt. However, many forms of property are exempt, and do not need to be liquidated, such as cars, homes, insurance policies, and retirement accounts.
Once all non-exempt assets are sold, and the money from the sales turned over to the creditors, most remaining debt is absolved. But some forms of debt cannot be discharged through Chapter 7 bankruptcy. These include child support payments, student loans, and criminal fines, among others. If most of your Sioux Falls, South Dakota debts are not dischargeable, you may want to consider options other than bankruptcy.
Chapter 13 Bankruptcy in Sioux Falls, South Dakota
Chapter 13 bankruptcy in Sioux Falls, South Dakota is markedly different. It may or may not be a better option than Chapter 7, depending on the facts of your individual case. Chapter 13 does not excuse any debt, but it creates a new payment plan that should give the debtor some breathing room. Typically, all of the debts are consolidated into 1 periodic payment. While this may make it take longer to pay off the debt, if the debtor is willing to make a few sacrifices, the plan should be manageable.
Which Type of Consumer Bankruptcy Should I File in Sioux Falls, South Dakota
Chapter 13 is normally a good option for people who have a stable income, and a large amount of non-exempt property that they can't part with. On the other hand, if most of the debtor's property is exempt, and he or she does not have a stable income, Chapter 7 might be more beneficial.
Of course, you should always seek the counsel of an accomplished local Sioux Falls, South Dakota bankruptcy attorney before you make the decision to file. He or she will be able to advise you of your options, and suggest the best possible course of action for your individual situation.