Filing Chapter 7 Bankruptcy with No Assets
Most people who file for bankruptcy do so because they do not have the means to pay their debts. So it is not unusual for a Chapter 7 case where there are no non-exempt assets that can be sold to repay creditors. This type of case is called a no asset bankruptcy.
If you have a property that is secured by a lien it is not an asset if the mortgage loan balance is more than its current value and you have no equity in the property. When a bankruptcy trustee cannot find any asset that can be sold off to pay debts, you will easily receive a bankruptcy discharge.
A no asset bankruptcy case starts just like any other bankruptcy. You file a petition with the bankruptcy court and then the automatic stay stops all collection activities of creditors. This means that you will temporarily be relieved from wage garnishment, collection letters, debt collection harassment, foreclosure and others. The automatic stay order halts all actions for creditors against you for the entire duration of the bankruptcy proceeding except if a creditor has made a petition and the court has approved it so that the creditor can go on with the collection. At this point, a trustee will be appointed by the court to oversee the bankruptcy case.
You are required to provide records of your finances relevant to the bankruptcy case within 15 days from the date of filing. You also need to declare the details of debts, income, assets, and living expenses. It is necessary to include the Means Test computation to determine if you have a sufficient income to pay back debts either in full or partial amount. If that's the case, you have to file a Chapter 13 bankruptcy instead of Chapter 7. If you are eligible for a Chapter 7 bankruptcy, the trustee will notify the creditors regarding the filing of bankruptcy, the 341 meeting or meeting of creditors, and the deadline for objections filing.
You will also be required to attend the 341 meeting. It would be necessary to inform the court if there are any secured debts that will be reaffirmed. Debt reaffirmation implies that the you will continue making the payments and in return the lender will not take the secured property.
Normally, the 341 meeting is scheduled within six weeks after the date of filing. You are required to attend the meeting to answer trustee's questions under oath. If creditors are present in the meeting, they can also ask questions. Creditors are not required to attend it and they do not come most of the time. Usually, the meeting just takes a few minutes. Although it is brief, you must attend it; otherwise, your bankruptcy case will be dismissed.
Your bankruptcy papers will be reviewed by the trustee once more to be sure that there are no assets to liquidate. After that the trustee files a no asset report with the court. If there are no objections of creditors within 30 days from the date of 341 meeting, the bankruptcy court will issue a discharge order of debts and the case will be closed.
If you have a property that is secured by a lien it is not an asset if the mortgage loan balance is more than its current value and you have no equity in the property. When a bankruptcy trustee cannot find any asset that can be sold off to pay debts, you will easily receive a bankruptcy discharge.
A no asset bankruptcy case starts just like any other bankruptcy. You file a petition with the bankruptcy court and then the automatic stay stops all collection activities of creditors. This means that you will temporarily be relieved from wage garnishment, collection letters, debt collection harassment, foreclosure and others. The automatic stay order halts all actions for creditors against you for the entire duration of the bankruptcy proceeding except if a creditor has made a petition and the court has approved it so that the creditor can go on with the collection. At this point, a trustee will be appointed by the court to oversee the bankruptcy case.
You are required to provide records of your finances relevant to the bankruptcy case within 15 days from the date of filing. You also need to declare the details of debts, income, assets, and living expenses. It is necessary to include the Means Test computation to determine if you have a sufficient income to pay back debts either in full or partial amount. If that's the case, you have to file a Chapter 13 bankruptcy instead of Chapter 7. If you are eligible for a Chapter 7 bankruptcy, the trustee will notify the creditors regarding the filing of bankruptcy, the 341 meeting or meeting of creditors, and the deadline for objections filing.
You will also be required to attend the 341 meeting. It would be necessary to inform the court if there are any secured debts that will be reaffirmed. Debt reaffirmation implies that the you will continue making the payments and in return the lender will not take the secured property.
Normally, the 341 meeting is scheduled within six weeks after the date of filing. You are required to attend the meeting to answer trustee's questions under oath. If creditors are present in the meeting, they can also ask questions. Creditors are not required to attend it and they do not come most of the time. Usually, the meeting just takes a few minutes. Although it is brief, you must attend it; otherwise, your bankruptcy case will be dismissed.
Your bankruptcy papers will be reviewed by the trustee once more to be sure that there are no assets to liquidate. After that the trustee files a no asset report with the court. If there are no objections of creditors within 30 days from the date of 341 meeting, the bankruptcy court will issue a discharge order of debts and the case will be closed.