Our South Carolina exemptions are adjusted for cost of living every other July 1. Exemptions in property allow the property to be protected from a judgment creditor or bankruptcy trustee up to the amount of the exemption. Think of it as a blanket. The blanket covers so much–the bigger the blanket, the more the coverage.
So, too, with exemptions
South Carolina has an interesting history with its exemption scheme. I like to say–somewhat in jest–that prior to 2007 and 2008 (when the current scheme went into effect), we really didn’t have exemptions in South Carolina. That’s because the exemption scheme was so paltry and limited that debtors had virtually no protection from creditors. The homestead was limited to $5,000 and vehicle equity limited to only $1,200–almost useless.
After years of being slathered in money by credit card issuers and other creditor interests, Congress passed so-called bankruptcy reform in 2005 with the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”).
Our South Carolina legislature realized–much to its credit–that South Carolina debtors were going to be afforded less protection under federal bankruptcy law. In response, the legislature increased the exemptions from being practically non-existent, to reasonable levels, first with the homestead exemption in 2007–increased from $5,000 to $50,000–and then to the other exemptions (vehicles, household goods, jewelry, cash, accounts, and so on) in 2008. The Bankruptcy Code allows states to opt out of the federal bankruptcy exemptions and enact their own, and South Carolina is an opt out state per S.C. Code 15-41-35. Consequently, our legislature decides the extent of asset protection, both in and outside of bankruptcy.
And the legislature made the blanket bigger.
The new exemption numbers
Here are the new exemptions effective July 1, 2014:
- homestead, up from $56,150 to $58,225
- household goods, up from $5,625 to $5,825
- jewelry, up from $1,125 to $1,175
- cash or liquid assets, up from $5,625 to $5,825
- tools of the trade, up from $1,675 to $1,750
- any property (frequently called the “wild card” exemption), up from $5,625 to $5,825
- cash value of life insurance, up from $4,500 to $4,625 (note also, there is an unlimited cash value exemption found in section 38-63-40(A); see “Bankruptcy & Cash Value Life Insurance” for more information on that subject).
Our exemptions in South Carolina are fair and reasonable, and I applaud the legislature for realizing that any dollar figure must be tied to inflation to be meaningful over time.