Debtors may file bankruptcy in South Dakota, in order to receive debt relief. The majority of residents opt to file straight bankruptcy. However, debtors wanting help to make payments more affordable will ask for a restructuring plan.
Options for Personal Bankruptcy in South Dakota
All states comply with U.S. Bankruptcy Code, Title 11. People in South Dakota file bankruptcy under Chapter 7 or Chapter 13.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is for those individuals that want relief from financial stress and are seeking a fresh start. However, to prevent citizens from taking advantage of the court, a means test determines whether the debtor is eligible for debt relief. The average income for the single wage earner in South Dakota is $35,533; the two-person household earns an average of $51,068; and a family of three has $58,135. Then, if the resale of some assets can resolve a portion of the debts, the court trustee disperses the proceeds equally among the creditors. All other debts, not exempt from bankruptcy, are forgiven. The debtor has a fresh financial start, to make better decisions in the future.
Chapter 13 Bankruptcy
Chapter 13 is specifically for those individuals that truly want to pay their debts, but circumstances have made the current budget financially impossible. If the debtor has no more than $336,900 in unsecured debt, $1,010,650 in secured debt, and money to pay bills after the basic necessities of living-but the payments are too high, the court will offer a repayment plan. After negotiating with creditors to reduce the total debt amount, payments are scheduled to eradicate debt in 3-5 years. As long as the payments are regularly made to the trustee and all other debts are current, the debtor retains all assets. (See more on Filing Chapter 13 in South Dakota).
Filing Bankruptcy during Foreclosure
Waiting until foreclosure proceedings are started, before filing for bankruptcy is not recommended. Although creditors can no longer ask for payments, until the court makes a determination, the legal action only delays the inevitable. In fact, the lien holder may ask the court to lift the stay and allow the foreclosure process to complete. Therefore, it is important to seek advice from a bankruptcy lawyer, before the property enters foreclosure.
South Dakota Bankruptcy Exemptions
In South Dakota, bankruptcy law allows for certain asset exemptions that the debtor can claim. Some of the assets kept from bankruptcy proceeds are listed below:
Type of Asset(s)
Details on Applicable Exemption(s)
Real property larger than 240 square feet of unlimited value-registered at least 6 months prior; no more than 1 acre in town or 160 acres in the country; sale proceeds up to $30,000-unless single, widowed, or 70 years and older; spouse or child of deceased owner can claim exemption
$250 monthly annuity; endowment, life, or health insurance payments up to $20,000; fraternal and society benefits; proceeds prohibited from paying beneficiary debt; life insurance proceeds up to $10,000-if spouse or child
Business partnership assets
City and public employees
Food and fuel for 1 year; Bible and books worth $200; burial plot, church pew, and clothing; head of household may claim $4000 in personal property, livestock in limited amounts and feed for 1 year; farm equipment; bedding worth $200; non-head of household can claim $2000 in personal property
Unemployment, workmen’s comp, and public assistance
Wages of prisoners and work programs; amount owed 60 days before filing that is needed for support
South Dakota Bankruptcy Court Filing Options
Use a Bankruptcy Lawyer
Attending bankruptcy court without benefit of legal counsel is strongly discouraged. With all of the nuances in the law, the list of exempt assets, and the formal proceedings of the court, it is foolhardy to appear alone. The legal and financial ramifications do not favor the best financial outcome for the debtor.
Use a Filing Service
A filing service fills out paperwork and submits the documents to the court. However, they are not responsible for any errors. No one will come to court, in order to answer questions or provide legal counsel. The debtor risks dismissal or criminal charges, if serious mistakes occur.
File “Pro Se”
Although debtors file pro se, when it costs too much to hire legal representation, borrowing the money is preferable to self-representation. Unless the debtor is well acquainted with South Dakota bankruptcy law, the consequences can adversely affect the financial outcome of the case.
Courts and South Dakota Bankruptcy Trustee Information
South Dakota District Court Main Office
128 United States Courthouse
400 South Phillips Avenue
Sioux Falls, SD 57104-6851