When you file for Chapter 7 bankruptcy, the trustee has the right to take possession of some of your assets so that he or she can sell them to pay off creditors. However, if you do not have any assets that the trustee can take, you might have to file a no asset bankruptcy. Here is what you need to know about the process.
What Is a No Asset Bankruptcy?
In each state, bankruptcy filers are allowed to keep assets that total value is equivalent to a certain amount. For instance, if your state allows you to keep assets totaling up to $25,000, you can keep those assets whose value add up to that amount, such as your car and home. The remaining assets are sold by the trustee.
However, if you do not have any assets of value after the state allowance, you could qualify for a no asset bankruptcy. In essence, you have absolutely no assets that can be sold to earn money to pay off the creditors.
How Do You File?
Filing for a no asset bankruptcy is essentially the same as filing for a normal bankruptcy. You first need to determine if you are eligible to file for a Chapter 7 bankruptcy. In each state, you have to meet certain income requirements. Since the requirements can vary from state to state, it is important you talk to your attorney to determine if you qualify.
Part of the qualification process is determining how much value your assets have. Even though the trustee will double-check the valuations you and your attorney place on the assets, it is idea for you to know the values so that you can determine whether or not the state allowance will cover your assets.
You would need to complete your bankruptcy documentation and submit it to the court. When the court receives your documentation, notice is given to all of your creditors that you are filing for bankruptcy.
Even though you have no assets, you still must attend the 341 hearing. The hearing is a chance for your creditors to challenge the canceling of their debts. It is also a chance for the trustee to ask specific questions about your filing. For instance, the trustee might ask you to confirm the amount of income you are claiming to receive.
Once the trustee has determined that you are eligible for a Chapter 7 and that you deserve a discharge, the court will approve it.
Whether you believe you qualify for a no assets bankruptcy or you do have assets that could be taken in the process, it is important you confer with an attorney before filing. He or she can help you understand your state's allowance and what to expect.
For professional legal help, contact a law firm such as Morrison & Murff.