A no asset bankruptcy case is essentially a bankruptcy in which the debtor will not have to pay out their full debts to creditors. This is a chapter 7 bankruptcy in which a debtor does not have any non-exempt property and the trustee does not have the opportunity to seize and distribute assets to creditors. No asset cases often go by very quickly because there is no need to sell off property, appraise various assets or make other arrangements in order to pay creditors back. Not every chapter 7 case will be at no asset case because the debtor may have some property that can’t be exempted. However, under the exemptions of the state you can exempt assets including: prescription health aides, education and some savings as assets, tax refunds and credits, your primary homestead up to any amount if you are a citizen of the state, up to $1000 worth of a motor vehicle, personal property up to $4000 without a homestead exemption.
In most of Chapter 7 cases in which there is no asset bankruptcy, assets that are exempted are done so because they’re not worth more than what is owed on them. If a person has a used vehicle that is valued under $1000 or a home with very minimal savings, it’s possible that they could qualify for a no asset bankruptcy.
A large number of chapter 7 clients fail to file no asset bankruptcies because it’s not possible for them to exempt everything. Trustees can often find items that exceed the overall value covered under a Chapter 7 liquidation bankruptcy. If you’re in a position where there is nothing to liquidate apart from your home, it is possible that your debts could be wiped clean without having to surrender any of your property.
Not all Debts Can Be Eliminated in a Chapter 7 Bankruptcy
A no asset chapter 7 bankruptcy may sound particularly easy but not all of your debts will be eliminated in these cases, some of the items that may not be covered under the debt liquidation can include debts accrued as a result of child support, alimony or spousal support, income taxes, student loans and more.
These are debts that will not be eliminated during a chapter 7 bankruptcy case and no matter what assets that you surrender, or if you are involved in a no asset case it can be very difficult to discharge these debts. If you can prove that your student loans or income taxes are causing an undue burden, you might be able to get these debts discharged but it can often be a huge longshot.
Secured debts will also not be eliminated. It’s possible that you’ll need to reaffirm the debt by keeping an asset and continuing to make payments or turn over the collateral that’s associated with that secured debt. Reviewing your options with an attorney can help you through the process of discharging these debts.
Does it Make Sense To File For Chapter 13 Instead?
Chapter 13 is one of the most popular types of consumer bankruptcy. The advantage of filing for Chapter 13 is that you will not lose out on your assets and you can make payments on your debt that can last between 3 to 5 years. At the end of chapter 13 bankruptcy your remaining debts will be eliminated. If you have assets that you are trying to preserve it can be wise to choose chapter 13 over Chapter 7 bankruptcy. If you have very little in the way of assets and you want a quicker bankruptcy process, choosing Chapter 7 bankruptcy can be beneficial as you’ll be through your bankruptcy process in 3 to 4 months.
If you are considering the option of filing for bankruptcy and you’d like to learn which is going to be the best option for you, it’s important to consider speaking to a professional attorney as soon as possible. Speaking to a bankruptcy attorney can ensure that you meet all of the requirements for bankruptcy and they will give you the right advice in moving forward with your bankruptcy process. Contact us today if you need legal advice on your bankruptcy!