Bankruptcy may seem like a last resort, but for many people who are drowning in debt, it offers a new beginning. Which type of bankruptcy to file depends on your particular circumstances. With Chapter 7 bankruptcy, your major assets are sold or liquidated to repay creditors as much as possible. In turn, remaining debts are wiped clean. Chapter 13 bankruptcy reorganizes debts and structures a repayment plan over a set time period.
While bankruptcy is federal law, each state has its own rules. Those considering filing bankruptcy in South Dakota should be aware of some key considerations in that state.
Filing Bankruptcy in Your Area
The United States Bankruptcy Court, South Dakota District, serves the entire state with divisions in the following locations:
- Central Division: Pierre
- Northern Division: Aberdeen
- Southern Division: Sioux Falls
- Western Division: Rapid Falls
Eligibility for Chapter 7
Chapter 7 bankruptcy is not an option for everyone. To qualify, your average monthly income must be less than South Dakota's median monthly income. If your income exceeds the median income in South Dakota, you must pass a stringent means test before you can file Chapter 7.
Length of Plan for Chapter 13
The length of a repayment plan under Chapter 13 bankruptcy also depends on your income. If you make less than South Dakota's median income, a Chapter 13 plan cannot exceed 36 months unless you prove there is good reason for it to be longer. In such cases, 60 months is the limit. If your average monthly income is greater than South Dakota's median income, you can expect a payment plan of about 60 months.
Rules Regarding Exemptions
All states have specific rules requiring what property you get to keep in a Chapter 7 bankruptcy filing. These are called exemptions, which also determine how much you must pay creditors in a Chapter 13 case. While many states give you the option of using the federal list of exemptions instead of the state list. But South Dakota does not. You must adhere only to South Dakota's list, which includes exemptions for:
- Real property that is at least 240 square feet and has been registered in the state for six months or longer
- Food and fuel to last one year
- Personal items such as books
- Earned wages owing 60 days prior to filing
- Public benefits
- Tools of the trade—items needed for your work
- Certain types of insurance
Attorney Consultation Can Help
State-specific bankruptcy laws can be complicated. For more detailed, specific information relative to your current situation, please contact a South Dakota bankruptcy lawyer.