You may have heard of a no-asset bankruptcy case. What is this type of bankruptcy and who qualifies for it? Here’s what you should know and how to get experienced legal help when you’re struggling financially with overwhelming debt.
Most Chapter 7 Bankruptcies are No-Asset Cases
To file a Chapter 7 bankruptcy, you must pass what is called a means test. This will determine your disposable income and whether or not you qualify to file a Chapter 7. In most cases, people who pass the means test do not have significant non-exempt assets.
Listing Exempt and Non-Exempt Assets
When you fill out your bankruptcy application, you’ll need to list the different types of assets you have. The two types of assets bankruptcy courts recognize are exempt and non-exempt assets.
An exempt asset is something you own that the court will not liquidate or sell to pay off your debts. A non-exempt asset is something you own that the court may liquidate to put money towards the debt you owe.
What Happens In a No-Asset Bankruptcy?
If you do not have any non-exempt assets that can be liquidated, the court will review your debts and decide which debts may be discharged.
Some kinds of debt that are considered secured, like student loans and tax debt, can’t be discharged and you will likely still have to make payments towards these debts after your bankruptcy is complete. If you have no secured debt, your unsecured debt may be discharged entirely.
Penalties for Concealing Assets
If the bankruptcy trustee discovers an asset after you’ve filed, they will notify the court and your creditors can then submit claims against that asset.
Some people genuinely forget that they have an asset, while others attempt to purposely hide the asset in order to keep it. If you are caught doing the latter, you could face the dismissal of your case.
Get Help Filing a No-Asset Bankruptcy Today
At Sims Bankruptcy Law, PLLC, we understand how frightening it can be to face mountains of debt that you have little hope of paying off without a significant windfall. We can help you explore your options for debt relief, including different types of bankruptcy that can give you a clean financial slate to start over with.
Contact us today for a consultation 469-751-7467 (DFW) or 254-304-7161 (Central Texas). We are available now to help you create a debt recovery plan.