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Bankruptcy: South Dakota

Filing bankruptcy in South Dakota gives debtors an opportunity to gain relief from overwhelming debt, and enables creditors to recover some payments based on the value of the debtor’s property or reliability of earnings.  1,982 bankruptcies were filed in South Dakota in 2010, ranking South Dakota 47th in the nation for the number of bankruptcy filings per capita.  90% of South Dakota’s bankruptcy petitions in 2010 sought protection under Chapter 7 bankruptcy.

Filing Bankruptcy in South Dakota

Bankruptcy in South Dakota is governed by federal law and all bankruptcy cases are initiated in the US Bankruptcy Courts in: Aberdeen, Pierre, Rapid City, Sioux Falls.

Although federal courts have exclusive jurisdiction over bankruptcy procedures, South Dakota law permits petitioners to use the exemptions found in the U.S. bankruptcy code or the exemptions provided under South Dakota law. The exemption systems cannot be mixed and matched. With the expert guidance of a bankruptcy attorney South Dakota petitioners can prepare for what personal property the systems permit them to keep in bankruptcy, and what must be sold.

Chapter 7 Bankruptcy, South Dakota

Chapter 7 bankruptcies in South Dakota barely edge out Chapter 13 as the most common bankruptcy filing. Chapter 7 may be preferable for petitioners who don’t hold a significant amount of assets, such as investments and substantial equity in a home, because a Bankruptcy Trustee may liquidate personal property that isn’t protected by South Dakota’s bankruptcy exemptions. Liquidation occurs when the Trustee converts personal assets to cash for distribution to creditors. South Dakota’s Chapter 7 bankruptcy law allows petitioners to keep some essential property; the exempt assets cannot be accessed by creditors seeking repayment.

The vast majority of Chapter 7 cases are “no-asset” cases where no property is taken.

South Dakota Bankruptcy Exemptions

South Dakota’s state laws designate detailed property exemptions that allow debtors to keep certain personal property and assets so they can move forward and be productive members of society. Bankruptcy in South Dakota permits debtors to choose exemptions from the federal or state lists.

Property exemption amounts are subject to change, so it is important to obtain the advice of a South Dakota bankruptcy attorney before making such an important decision.  South Dakota bankruptcy exemptions include:

South Dakota Homestead Exemption

  • Gold or silver mine, mill or smelter not exempt
  • Unlimited value: Real property or mobile home (larger than 240 sq. ft. at its base and registered in state at least 6 months prior to filing); property cannot exceed 1 acre in town or 160 acres elsewhere; sale proceeds to $30,000 ($170,000 if over age 70, widow or widower who hasn’t remarried); exempt for 1 year after sale (Husband and wife may not double)

South Dakota Personal Property Exemption

  • Food and fuel to last 1 year
  • Clothing
  • Family pictures
  • $200 total: Bible, schoolbooks and other books
  • Burial plots, church pew
  • Cemetery association property

South Dakota Wage Garnishment Exemption

  • Earned wages owed 60 days prior to filing bankruptcy, needed for support of family
  • Wages of prisoners in work programs

South Dakota Public Benefits Exemption

  • Public assistance
  • Workers’ compensation
  • Crime victim’s compensation

South Dakota Insurance Exemption

  • $20,000 total: Health benefits
  • $250 per month: Annuity contract proceeds
  • $20,000 total: Endowment, life insurance and policy proceeds; $20,000 cash value: if policy issued by mutual aid or benevolent society
  • $10,000 total: Life insurance proceeds, if beneficiary is surviving spouse or child
  • Life insurance proceeds, if clause prohibits proceeds from being used to pay beneficiary’s creditors
  • Fraternal benefit society benefits

South Dakota Pensions and Retirement Savings Exemption

  • Public and City employees
  • $1,000,000 total: IRAs, Roth IRAs and ERISA-qualified benefits, limited to income and distribution

South Dakota Wild Card Exemption

  • $6,000 total: may be claimed by head of the family; $4000 total: non-head of family may claim any personal property

Chapter 13 Bankruptcy, South Dakota

In 2010, ­10% of debtors petitioned for protection under Chapter 13 bankruptcy laws in South Dakota.  When a petitioner files Chapter 13 bankruptcy in South Dakota, a court-appointed Trustee reorganizes the petitioner’s debts and develops a 3-5 year repayment plan, by which creditors are repaid using the debtor’s future earnings.  Chapter 13 petitioners in South Dakota keep most – or all – of their property.

How to File Bankruptcy in South Dakota

Eligibility for property exemptions should be a primary concern when deciding whether to petition for bankruptcy protection. The ideal solution will allow you to keep your major assets and your debts qualify for discharge.  Because every case is unique, a South Dakota bankruptcy attorney can go over a debtor’s financial circumstances and decide whether Chapter 7 or Chapter 13 bankruptcy is the best option for their situation.

Bankruptcy Attorney: South Dakota

It is highly advisable that a bankruptcy petitioner know their rights and obligations as a debtor.  A South Dakota bankruptcy attorney can interpret and simplify the federal laws and state exemptions for those considering bankruptcy protection.  Because personal bankruptcy cases can be technically complicated and emotionally overwhelming, the expert counsel of a South Dakota bankruptcy attorney can navigate the legal maze and recommend a solution that may alleviate your financial and emotional stress.