South Carolina Laws on What Can Be Seized After Defaulting on a Loan

In South Carolina, you can secure a loan by using personal property as collateral for the debt. If you default on a secured debt, the lender can seize your property and sell it so that the sale proceeds cover your unpaid balance of the loan. However, South Carolina has strict laws with which lenders must comply in a loan default occurs.


Under laws in the state of South Carolina, a mortgage lender has no ownership claim on a piece of financed property. However, the lender does have a claim on the loan proceeds and can organize the sale of the property as a way of settling the debt. If you default on your mortgage, your lender must file a default notice known as a "lis pendens" at the local courthouse. Other parties with claims on the home and lien holders are notified about the default. If you fail to settle the debt, the lien holder petitions to the courthouse to sell your home and proceeds are used to settle outstanding liens. (References 3)

Deficiency Judgment

In many states, when a lender forecloses on your home, the debt ceases to exist, even if the foreclosure sales fails to raise enough funds to cover your mortgage. In South Carolina, a judge can issue a deficiency judgment, in which case, any portion of the loan that remains outstanding after the foreclosure sale, remains an obligation of the foreclosed homeowner. A judge can order you to repay the remaining debt and that could involve ordering you to use your cash assets to settle the mortgage.


In South Carolina, you technically default on a car loan when you fall more than 10 days behind on your regularly scheduled payments. At that time, your lender must issue a default notice known as the "right to cure." You have 20 days to make your payment; otherwise, the law enables your lender to use "self help" to repossess your car. This means the lender can tow your car from your work or home. You then have up to 14 days to redeem your car by settling the debt. If you fail to do so, the lender can then sell your car and use the sale proceeds to settle the debt.

Other Loans

South Carolina laws allow lenders to assess penalty fees of up to $110 when you fail to make your regularly scheduled payment on a line of credit. Lenders can charge penalty fees on both secured and unsecured debts. Lenders cannot garnish your wages to collect sums owed on unpaid consumer loans, leases or rental agreements and can seize only property that secures a loan. However, although lenders have no claims on your other assets, a healthcare provider can have a lien placed on real estate if you fail to settle a medical bill within 20 days of receiving a demand for payment from the care provider.