In South Dakota, one can either file for Chapter 7 or Chapter 13 bankruptcy, depending on the debts and related situations. According to South Dakota bankruptcy laws, the Means test plays an essential role while filing bankruptcy.

• If one has to file for Chapter 7 bankruptcy, they have to pass the Means test. However, if your income is below the South Dakota median income for the specified family size, you get exemption from the test, and you can file for Chapter 7 bankruptcy.

• And, if your income falls under the higher income group, you have to complete the Means test to decide whether you can pay back some part of your unsecured debts via Chapter 13 bankruptcy.

Note: To understand South Dakota bankruptcy laws, Median Income and  Means test, it would be best to consult or hire an attorney specialized in the South Dakota bankruptcy laws.

Chapter 7 or Chapter 13 bankruptcy?

Chapter 7 bankruptcy is liquidation, and with this, you can give a fresh start to your life. The trustee collects your assets (that are not exempted), sells, and pays the creditors to discharge all your debts. But, some debts cannot discharge with Chapter 7 bankruptcy. These debts include alimony, child support payments, student loans, certain taxes, and fraudulent debts.

Though Chapter 7 eliminates the burden of heavy debts, there are situations when Chapter 13 bankruptcy is preferable over Chapter 7. Such situations could be when you have business payments or missed mortgage payments or want to secure your property, both non-exempt and exempt. Chapter 13 bankruptcy is a reorganization and lets you make a repayment plan (using your future income) to pay back the debts over time and restore original agreements. This bankruptcy also provides security against wage garnishment and creditor’s collection efforts.