Business Debt Restructuring in South Carolina: 7 Laws That Change Your Leverage (2026)

The Two South Carolina Facts That Pull in Opposite Directions

South Carolina has no usury ceiling on your advance and no disclosure duty on the funder who wrote it, which means the front end of the transaction is about as unregulated as it gets anywhere in the country. What the state did keep is a collection system built in the nineteenth century and never modernized, one with no garnishment writ a creditor can point at a bank, an express statutory bar on reaching earnings, and an execution that binds personal property only when a sheriff actually levies on it. A funder can charge you anything it can get you to sign, and then it has to line up behind a process that moves at the speed of a county sheriff.

That combination decides how a South Carolina file gets worked, and it decides it in a way that surprises most owners. In New York or New Jersey the urgent question is how many days you have before the operating account is frozen, because in those states the answer is measured in days. Here the urgent questions are different: what the funder can do with its U.C.C. financing statement and its notification rights against your customers before it ever gets to court, whether a judgment entered in another state is coming here for domestication, and what you did with company assets in the eighteen months before things got tight, because South Carolina measures that last question under a statute the colony adopted in 1712.

The seven items below run in the order a South Carolina file actually breaks. Start with the paper that can turn into a judgment without a trial, move through what the state does and does not do about rate and disclosure, then to the transfer rules that quietly disqualify half the restructuring ideas owners bring us, then to how enforcement actually reaches money, which claim your company can bring, and finally to the schedule your own house and truck sit on once a personal guaranty puts your name on the judgment.

1. South Carolina Makes You Swear to the Confession Yourself

A confession of judgment is a real device in South Carolina and it is nothing like the clause buried on page eleven of a funding agreement. S.C. Code §15-35-350 allows a judgment by confession to be entered without action, either for money due or to become due or to secure a person against a contingent liability, but only in the manner the article prescribes, and §15-35-360 prescribes it tightly. Before the judgment goes in there must be a statement in writing, made and signed by the defendant and verified by his oath, which states the amount for which judgment may be entered, authorizes its entry, and states concisely the facts out of which the debt arose so as to show the sum confessed is justly due or to become due. Under §15-35-370 that sworn statement is filed with the clerk, the clerk endorses the judgment on it, and the statement and affidavit together become the judgment roll.

Read those requirements against what you actually signed. A cognovit clause executed at funding, months or years before any default, contains no oath, no recital of the facts out of which the debt arose, and no statement of an amount that could possibly have been justly due on the day it was signed, because on that day the funder had not yet advanced the money. That gap is the argument, and it is a threshold argument rather than a defense you save for trial, because §15-35-360 conditions the clerk’s authority to enter anything at all. We have not located a South Carolina appellate decision applying the section to modern merchant cash advance paper, so treat this as the position your counsel takes rather than a settled holding, and take it early.

The practical route a funder uses is different, and it is the one worth watching for. It gets a judgment somewhere else and brings it here under the Uniform Enforcement of Foreign Judgments Act at §§15-35-900 through 15-35-960. Under §15-35-920(A) it files an authenticated copy with the clerk in a county where you reside or own property, along with an affidavit that the judgment is final, unsatisfied and not further contested. Under §15-35-920(B) no execution issues and no enforcement proceeding may be taken until thirty days after notice of filing is served, and §15-35-930(B) requires that notice to tell you in terms that you have thirty days from receipt to seek relief.

Then comes the provision that makes South Carolina a materially better place to fight a domesticated judgment than Florida or Texas. Section 15-35-920(C) provides that if the judgment is contested, or if you file a motion for relief or a notice of defense under §15-35-940, enforcement is stayed automatically and without security until the court finally disposes of the matter, and no levy, writ of attachment or other encumbrance may issue while that stay is in effect unless the creditor shows at a hearing that your property is being disposed of or removed with intent to defraud. Section 15-35-940(B) then puts the burden of proving the foreign judgment entitled to full faith and credit on the creditor, and §15-35-960 removes foreign judgments based on claims contrary to South Carolina public policy from the article altogether. If a New York confession lands on your desk with an SC filing stamp, the calendar starts that day. Our overview for South Carolina MCA defense covers what the response looks like.

2. Eight and Three-Fourths Percent Is a Default Rate, Not a Cap

Chapter 31 of Title 34 is titled Legal Rate of Interest and it contains exactly two sections. The first, §34-31-10, is about dollars, dimes, cents and mills. The second, §34-31-20(A), says that in all cases of accounts stated and in all cases where a sum of money is ascertained and, being due, draws interest according to law, the legal interest is at the rate of eight and three-fourths percent per annum. That is a gap filler for a debt where no rate was agreed. It is not a ceiling, there is no ceiling elsewhere in the chapter, and the maximum-rate and penalty provisions the chapter once carried were repealed decades ago and never replaced.

Owners hear a number like twelve percent attached to South Carolina and assume it constrains their funder. It does not, and the reason is a definition rather than an exemption anyone has to plead. Section 37-3-501(1) defines a supervised loan as a consumer loan on which the finance charge exceeds twelve percent per year, and §37-3-502 requires a State Board of Financial Institutions license to make or take assignments of those loans. Section 37-3-104 then defines a consumer loan as one where the debtor is a person other than an organization, the debt is incurred primarily for a personal, family or household purpose, either installments or a loan finance charge applies, and the principal does not exceed twenty-five thousand dollars unless land secures it. Your advance fails at least two of those prongs, and a sole proprietor’s business borrowing fails the purpose prong no matter what the entity paperwork says.

From the funder’s side of the table that is the entire reason a South Carolina file prices the way it does. Nobody underwriting your account has to think about a rate ceiling, a licensing regime, a filed rate schedule or a state examiner, because the state has none of those pointed at business credit. What is left to argue in a South Carolina file is not the rate. It is whether the agreement is a purchase of receivables or a disguised loan on its own terms, whether the reconciliation obligation was honored when you asked, whether the U.C.C.-1 was authorized and where it sits in priority, and whether the payoffs sent to prior positions match what was actually disbursed to you.

One rate does follow a judgment and it compounds. Section 34-31-20(B) sets post-judgment interest at the prime rate listed in the first edition of the Wall Street Journal published for each calendar year for which damages are awarded, plus four percentage points, compounded annually, and requires the South Carolina Supreme Court to issue an order by January 15 each year confirming the annual prime rate. Compounding is unusual and it is why an unsatisfied South Carolina judgment four years old is a much larger number than the one that was entered. Run that arithmetic before you decide to let a judgment sit while you rebuild.

3. The Disclosure Bill Has Not Moved Since February 2025

As of August 2026 South Carolina has no commercial financing disclosure law. No statute requires a funder to hand your business a page stating the amount financed, the amount disbursed after fees, the total repayment obligation, the finance charge or an estimated annual percentage rate before you sign. There is one bill, S. 347 of the 126th General Assembly, which would enact a Commercial Financing Disclosure Act by adding Chapter 81 to Title 39. It was introduced and read a first time on February 13, 2025 and referred that same day to the Senate Committee on Labor, Commerce and Industry, and the docket shows nothing after that. Its own text would have commenced January 1, 2026, a date that has already passed.

What that absence changes is where a negotiator gets purchase. In California or New York a missing or defective disclosure is a regulatory defect the funder would rather not have documented, and it opens the conversation. Here the opening has to be built out of the agreement and the transaction record, which is slower work and, in our files, more durable work, because a contract defect survives the argument about whether a disclosure statute even created a private right. The record in a South Carolina file means the specified percentage against actual deposits, every reconciliation request you sent and what came back, the filing dates on each financing statement, the broker commission taken out of the funded amount, and the payoff letters on the positions this advance was supposed to retire.

There is one South Carolina statute that most owners and a surprising number of advisers have never read, and it points at the broker rather than the funder. Title 34, Chapter 36 governs loan brokers. Section 34-36-10(1) defines an advance fee as any consideration assessed or collected prior to the closing of a loan by a loan broker, and §34-36-10(2) defines a borrower as a person obtaining or desiring to obtain a loan of money, a credit card or a line of credit, with no personal, family or household limitation anywhere in the definition. Section 34-36-20 then prohibits three things outright: collecting an advance fee, making false or misleading representations or omitting a material fact in the offer or sale of loan broker services, and concealing a material fact in dealings with the borrower or with the Department of Consumer Affairs.

The teeth are worth knowing before you write off the broker who placed your paper. Section 34-36-20(2) reaches a misrepresentation notwithstanding the absence of reliance by the buyer, which removes the element that kills most fraud claims. Section 34-36-70 makes a violation a misdemeanor carrying a fine up to five thousand dollars or up to one year, with each violation a separate offense. Section 34-36-80(A) makes a violation an unfair trade practice under Chapter 5 of Title 39, which is how a private damages claim gets there. The honest limits are two: §34-36-80(B) allows suit against the surety bond or trust account if any, which is the legislature conceding that this chapter requires neither a bond nor registration, and nobody has yet litigated whether a broker placing a receivables purchase rather than a loan falls inside the definition at all.

4. The Transfer Rule Here Dates to 1712 and Has No Lookback

Forty-some states run fraudulent transfer law on a uniform act with a defined set of badges, a reasonably-equivalent-value test and a four year extinguishment period. South Carolina does not. It runs on S.C. Code §27-23-10, universally called the Statute of Elizabeth, whose history line traces to 1712 and behind that to 13 Eliz. c. 5. The operative language is unchanged and unmodern: every gift, grant, alienation, bargain, transfer and conveyance of lands or goods and chattels, and every bond, suit, judgment and execution, made to or for any intent or purpose to delay, hinder or defraud creditors of they're just and lawful actions, suits, debts and accounts, must be deemed clearly and utterly void as against the creditor so hindered. If your adviser hands you a memo about voidable transactions and reasonably equivalent value, that memo was written for a different state.

The elements come from case law rather than from the section, and they split two ways. In Oskin v. Johnson (S.C. 2012) the Supreme Court described conveyances as set aside under two conditions: first, where there was valuable consideration and the transfer was made by the grantor with actual intent to defraud, and second, where a transfer was made without actual intent but without valuable consideration. On the second branch, the one that catches ordinary restructuring moves, the transfer is set aside only where the creditor establishes that the grantor was indebted to it at the time of the transfer, that the conveyance was voluntary, and that the grantor failed to retain enough property to pay the indebtedness in full, measured not merely at the moment of transfer but in the final analysis when the creditor comes to collect. That formulation runs through Mathis v. Burton (S.C. Ct. App. 1995) and Albertson v. Robinson (S.C. Ct. App. 2006).

Two features of this regime cut for you and one cuts hard against you. The standard of proof is clear and convincing evidence rather than a preponderance, which Oskin confirms. The constructive-fraud branch belongs to creditors whose debt was in existence at or before the time of the transfer, so a funder that advanced money after you moved an asset generally has to prove actual intent instead of coasting on the voluntary-transfer test. Against you sits the absence of any statutory extinguishment period. There is no four year window here that closes on its own, because §27-23-10 contains no limitations provision at all, and the question falls back on the general statute at §15-3-530, where subdivision (7) supplies three years for relief on the ground of fraud and by its own terms does not begin to run until the aggrieved party discovers the facts constituting the fraud. A discovery-triggered clock on a transfer nobody has looked at yet is not a clock you can count on having run.

One more piece of the chapter matters and it is the only real safe harbor. Section 27-23-40 provides that nothing in §§27-23-10 through 27-23-30 impeaches a conveyance made upon or for good consideration and bona fide, which is the reason contemporaneous documentation of value is the whole ballgame in a South Carolina workout. Note also that the eleven-factor presumption list in §27-23-10(B) is written for child support debtors and does not hand a commercial creditor a statutory badge list. And the federal overlay is real: in Friedman v. Wellspring Capital Management, LLC (Bankr. D.S.C. 2024) the court confirmed that a trustee’s avoidance claims under 11 U.S.C. §544(b) in a South Carolina case run on §27-23-10. Nothing here is a reason to freeze, and it is emphatically not a reason to move quietly. It is the reason every asset transfer contemplated during a South Carolina restructuring gets dated, valued and papered by counsel before it happens.

5. Nobody Serves a Garnishment on Your Bank in This State

South Carolina never built the machinery other states use to convert a judgment into money quickly, and the omission is on the page rather than in the case law. Section 15-39-410 lets a judge order any property of the judgment debtor not exempt from execution, whether in his own hands or another person’s or owed to him, applied toward satisfying the judgment, and then adds the exception that makes this state unusual: except that the earnings of the debtor for his personal services cannot be so applied. Section 15-39-420(2) says the same thing from the other direction, providing that there shall be no garnishment of earnings for personal services rendered by an employee regardless of where the debt was incurred. There is no general wage garnishment for an ordinary money judgment here, and there is no bank garnishment writ either, because the chapter simply does not create one.

What a judgment creditor actually has is slower and noisier. Under §15-39-20 and §15-39-30 it may enforce and issue execution at any time within ten years of entry, and executions have active energy for that whole period without renewal. Section 15-39-100 then limits what an execution accomplishes: executions do not bind personal property, which is bound only by actual attachment or levy, and then only for four months from the date of that levy. To get past a sheriff who finds nothing, the creditor goes to supplementary proceedings under §15-39-310, which lets a judge order you in to answer about your property under oath once an execution has been returned unsatisfied in whole or in part, or on an affidavit after issuance showing you hold property you unjustly refuse to apply, and §15-39-350, which lets a judge haul in any person or corporation holding your property or owing you more than ten dollars. Section 15-39-430 allows a receiver and §15-39-440 allows an order forbidding transfers.

The prejudgment picture is tighter still. A warrant of attachment under Chapter 19 of Title 15 requires an affidavit showing, under §15-19-50, that the defendant is a foreign corporation or nonresident, is a fleeing vessel master, or has departed, removed, assigned, disposed of or secreted property with intent to defraud creditors, and §15-19-80 requires the plaintiff to post an undertaking with surety for the defendant’s damages before the warrant issues. An in-state operating company that is simply behind on its payments does not fit those grounds. That is why a South Carolina file rarely opens with a frozen account, and why the leverage clock here runs on something else entirely.

The something else is Article 9, not the courthouse. A funder holding a perfected security interest in your accounts does not need a judgment to start notifying your account debtors and collecting your receivables directly, and that mechanism moves in days rather than the months a judgment takes. Meanwhile the judgment itself does one thing efficiently: §15-35-810 makes a final judgment a lien on your real estate in any county where it is entered on the book of abstracts and indexed, running ten years from the date of the judgment, and §15-35-820 keeps it off real property the Constitution exempts. If your receivables are already being intercepted, read our piece on what happens when a U.C.C. lien reaches the account before you assume the courthouse is the threat.

6. Your LLC Can Sue Under SCUTPA and Still Lose on Public Impact

South Carolina does not shut businesses out of its unfair practices statute the way many states do, and the standing question is answered in the definitions. Section 39-5-10(a) defines person to include natural persons, corporations, trusts, partnerships, incorporated or unincorporated associations and any other legal entity, and §39-5-10(b) defines trade and commerce to reach the advertising, offering for sale, sale or distribution of any services and any property, tangible or intangible, wherever situated. Section 39-5-20(a) declares unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce unlawful, and directs courts to be guided by Federal Trade Commission and federal court interpretations of section 5(a)(1) of the FTC Act.

The remedy schedule is the strongest of any statute on this page. Under §39-5-140(a) a person who suffers an ascertainable loss of money or property as a result of an unlawful act may sue for actual damages, the court shall award three times the actual damages on a finding of a willful or knowing violation, and upon any finding of a violation the court shall award the plaintiff reasonable attorney’s fees and costs. Section 39-5-140(d) defines a willful violation as one where the party knew or should have known the conduct violated §39-5-20, which is a lower bar than the specific-intent standard owners assume. Mandatory treble damages plus mandatory fees is a number a funder’s counsel has to price, and pricing it is exactly what a demand letter is for.

The requirement that kills most commercial SCUTPA claims is not in the statute at all. South Carolina courts read in a public impact element, and the operative formulation is short: to be actionable under the Act the unfair or deceptive act or practice must have an impact upon the public interest, and such acts have that impact if they have the potential for repetition. That comes from Haley Nursery Co. v. Forrest (S.C. 1989) and was applied in York v. Conway Ford, Inc. (S.C. 1997), where the court held the claim should have survived because the defendant was in the business of selling cars and the alleged practices could certainly be repeated. See also Daisy Outdoor Advertising Co. v. Abbott (S.C. 1996). A one-off dispute between two commercial parties, pleaded as a private grievance, does not clear it.

For a merchant cash advance file that element is usually the easiest one to plead and the one owners least expect to have to plead. A funder using the same form agreement, the same reconciliation language and the same collection script across hundreds of merchants is describing repetition on its face, and the evidence for it is public: other merchants’ U.C.C. filings, other lawsuits on the same paper, the funder’s own marketing. Two further limits belong in the same breath. Section 39-5-140(a) permits the action individually, but not in a representative capacity, so no class action. And §39-5-150 gives three years after discovery of the unlawful conduct, while §39-5-40(a) exempts actions permitted under laws administered by a regulatory body, with the burden of proving that exemption placed on the party claiming it.

7. The Guarantor Table Went Up Again on July 1, 2026

Once a personal guaranty turns into a judgment against you individually, S.C. Code §15-41-30 is the list of what a creditor cannot take from a debtor domiciled in this state, and the printed dollar figures in the code are not the operative ones. Section 15-41-30(B) requires that each dollar amount in items (1) through (14) be adjusted every even-numbered year to the Southeastern Consumer Price Index, All Urban Consumers, rounded to the nearest twenty-five dollars, with the Economic Research Division of the Revenue and Fiscal Affairs Office publishing the new figures in the State Register no later than March 1. Those figures were published in the State Register on February 27, 2026 and took effect July 1, 2026, on a cumulative index change of 60.2 percent since 2006.

The current numbers, effective July 1, 2026, are these. Your residence interest is protected to $80,125, with the aggregate for multiple homestead exemptions on a single living unit capped at $160,250 and each co-owner limited to his fractional portion of that figure. One motor vehicle is protected to $8,000. Household furnishings, goods, apparel, appliances, books, animals, crops and musical instruments held primarily for personal or family use run to $6,400 in the aggregate, jewelry to $1,600, and the accrued dividend, interest or loan value of an unmatured life insurance policy to $6,400. The tools of your trade, meaning implements, professional books and tools of the trade of you or a dependent, are protected to only $2,400 in the aggregate, which is the figure that ends most conversations about keeping the equipment.

Two provisions in that table decide real cases. The wildcard at (A)(7) protects $8,000 of an unused exemption amount from items (1) through (6), which means a guarantor with no equity in a house has real room and a guarantor sitting on a homestead has almost none. The cash exemption at (A)(5) protects $8,000 in cash and other liquid assets, defined to include deposits, securities, notes, drafts, unpaid earnings not otherwise exempt, accrued vacation pay, refunds, prepayments and other receivables, but by its own terms that exemption is available only to an individual who does not claim a homestead exemption. You choose one. The firearms exemption at (A)(15), $3,000 for up to three firearms, sits outside the indexing instruction in subsection (B) and has not moved.

Two more limits belong on the page. Section 15-41-35 bars an individual from using the federal exemptions at 11 U.S.C. §522(d) in a South Carolina bankruptcy except as this chapter or another state law expressly permits, so the schedule above is the schedule, in state court and in bankruptcy alike. And the section is written around a debtor domiciled in this state, with no tenancy-by-the-entireties provision of the kind that shelters a married couple’s residence in North Carolina or Florida, which is why two signatures on a guaranty change the arithmetic badly rather than doubling your protection. If a suit already names you as well as the company, our page on being sued personally on an advance covers what the guaranty actually reaches.

What a South Carolina File Looks Like When It Is Working

The order matters more here than in most states because the pressure does not come from the courthouse. Pull every funding agreement, every addendum and every amendment, then run a U.C.C. search at the Secretary of State and print the results with dates. Under S.C. Code §36-9-513(c) a secured party has twenty days after receiving an authenticated demand from you to send or file a termination statement where there is no remaining obligation and no commitment to advance, and §36-9-625(e)(4) allows recovery of five hundred dollars in each case where it fails to do so. The five hundred dollars matters far less than what a stale filing represents, because a funder that has been paid and left its financing statement sitting on the index has a documented compliance problem, and documented compliance problems are what change the tone of a settlement call.

Then price the alternative from the funder’s side, because that is the number it is actually comparing your offer against. A South Carolina collection file means suit in circuit court, a contested answer, a judgment that cannot be pointed at your bank on service, an execution that binds personal property only when a sheriff levies, supplementary proceedings that need an execution back from the sheriff before they open, and a lien on real estate you may not own. Set against that, a written settlement funded on a schedule, with the U.C.C. terminated and releases exchanged, is a recovery a receivables desk can book this quarter. Settlements in the files we work typically land somewhere between 30 and 60 cents on the balance, and where they land inside that band is a function of how much of the above is documented before the first call.

The things that reliably cost owners money in this state are the ones done quietly. Moving equipment into a second entity without a contemporaneous valuation, paying yourself back on a member loan while the advances go unpaid, retitling a truck to a spouse, or opening a new operating account and letting the old one go dry are each individually explainable and collectively a Statute of Elizabeth exhibit. Take advice before you change anything about how the debits are paid, because revoking an ACH authorization or moving a bank is a legal act with consequences under your agreement and often under a personal guaranty. The sequence that works is documentation first, counsel second, and communication with the funder third, in that order and not the other one.

When Another State’s Law Is Written Into Your Agreement

Most advance agreements signed by South Carolina businesses recite the law of somewhere else, usually New York, and owners read that recital as the end of the discussion. It is not, and two South Carolina provisions are worth knowing before you concede the point. Section 15-7-120(A) provides that notwithstanding a contract provision requiring a cause of action to be brought somewhere other than as provided in Title 15 and the South Carolina Rules of Civil Procedure, the cause of action alternatively may be brought here in the manner those rules provide. Section 15-7-120(B) goes further and says an arbitration provision requiring proceedings outside this State is not enforceable as to a claim that would otherwise be triable in South Carolina courts, though whether the Federal Arbitration Act preempts that subsection in a given case is contested and we have not located a controlling South Carolina answer, so treat it as an argument rather than a rule.

The choice of law recital carries the same asterisk. South Carolina’s Article 1 rule at §36-1-301(a) retains the older reasonable-relation limit rather than the broader modern formulation, which means a clause pointing at a state with no connection to the transaction is not automatically self-executing. That question belongs to South Carolina counsel on the specific facts of your deal, and the answer can cut either way: a New York choice of law recital may pull New York’s criminal usury line and its commercial financing disclosure regime into a conversation about paper a Charleston company signed, which is occasionally the best thing in the file. Read the recital before you decide whether it is working for you or against you.

Who Should You Call? Our Top-Rated Business Debt Firms

One firm on this list works the entire lifecycle of a business debt file, from stopping the daily debits through attorney-led negotiation, UCC lien removal, and a signed release. The other two cover broader debt categories that often sit alongside the advances. Choose accordingly.