The biggest fear most people have about bankruptcy is losing everything they own. In reality, most people who file Chapter 7 in South Dakota keep all or nearly all of their property. That’s because of exemptions: laws that protect certain property from being sold to pay creditors.
Here’s an overview of how South Dakota’s exemptions work and what they typically protect.
South Dakota Uses Its Own Exemptions
Some states let you choose between state exemptions and a federal list. South Dakota doesn’t. If South Dakota exemptions apply to your case, you use the state list, along with certain federal protections that apply everywhere, such as Social Security benefits.
Whether South Dakota’s list applies depends on where you’ve lived for the past two years. If you moved recently, see our post on the 730-day rule.
The Homestead Exemption: Your Home
South Dakota has one of the strongest homestead exemptions in the country. There is no dollar cap on the value of the home you live in. Instead, the exemption is limited by size:
- In a town or city: up to one acre
- Outside a town: up to 160 acres
A few other points:
- Married couples can’t double it. The homestead exemption covers one home per household, whether one or both spouses file.
- Mobile homes can qualify if they meet the statute’s requirements.
- Sale proceeds are protected for a limited time. If you sell your home, a capped amount of the proceeds is protected for one year so you can buy a new home. The cap is higher for homeowners 70 or older and certain surviving spouses.
- Your mortgage still has to be paid. The exemption protects your equity from the trustee, not from your lender.
Personal Property
South Dakota fully protects certain everyday items, including:
- Clothing
- Family pictures
- A one-year supply of food and fuel
- A church pew and burial plot
- Professionally prescribed health aids
- A limited value of books
For everything else, such as equity in a car, tools, electronics, or cash, South Dakota provides a “wildcard” exemption you can apply to the property of your choice. The amount is higher for heads of household than for single filers, and married couples who file together can often each claim their own amount. Because these figures matter for planning, we’ll confirm current amounts with you during your consultation.
Retirement Accounts and Benefits
- Retirement accounts: Qualifying 401(k)s, IRAs, pensions, and similar plans are generally protected.
- Public benefits: Social Security, unemployment, workers’ compensation, and public assistance are generally protected.
- Support payments: Child support and alimony you receive are protected up to a limit.
- Life insurance and annuities: Certain proceeds and cash values are protected, with limits.
- Recent wages: Wages earned in the 60 days before filing are protected if they’re needed to support your family.
What Happens to Property That Isn’t Exempt?
If you own something that isn’t fully covered, the Chapter 7 trustee can sell it and use the money to pay creditors. That is less common than people expect. Often the non-exempt value is too small to be worth selling, or there are ways to plan around it, such as using the wildcard exemption strategically or paying the trustee the non-exempt value to keep the item. Careful planning before you file makes a big difference.
Talk Through Your Exemptions Before You File
Every case is different, and the details of your property, debts, and family size all affect which exemptions you can use. Severin Law Firm helps South Dakota residents file Chapter 7 bankruptcy virtually, with no office visit required. Attorney Tom Severin is licensed in South Dakota and admitted to the U.S. Bankruptcy Court for the District of South Dakota. Call 701-433-1411 or request a free consultation to find out what you can keep.
Related: Chapter 7 Bankruptcy in South Dakota · Sioux Falls Bankruptcy Attorney · Rapid City Bankruptcy Attorney
Disclaimer: This article is general information, not legal advice. Exemption amounts and rules change, so speak with an attorney about your situation. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
