What Is a “No-Asset” Bankruptcy? How Is It Different from Other Chapter 7 Filings?
If you have decided to file for protection under the bankruptcy laws, and qualify for a Chapter 7 discharge of your debts, one of the first things you’ll need to do is provide the bankruptcy court with an inventory of your assets. As a general rule, those assets that are not covered by state or federal exemptions (you must choose one or the other) must be transferred to the bankruptcy court. The court will then sell those assets and use the proceeds to repay your creditors.
What Is a “No-Asset” Bankruptcy?
When you can fully protect everything you own with the exemptions available under state or federal law, your bankruptcy is considered to be a “no-asset” filing. In Texas in particular, because of the generous exemptions available under state law, most Chapter 7 petitions are no-asset filings.
In Chapter 7 filings where all assets cannot be protected, the court will typically require that creditors file a proof of claim to receive any of the proceeds from the sale of property. However, with a no-asset bankruptcy, the court will notify all creditors that there insufficient assets in the bankruptcy estate to allow any creditors to receive payments. If, however, during the bankruptcy process, additional assets are uncovered, the court will let creditors know, so that they can prepare and submit the necessary documentation to claim some portion of the proceeds of a bankruptcy sale.
The procedures for filing a no-asset bankruptcy are exactly the same as those where sufficient assets are held. Immediately upon filing your petition, you’ll have the protection of the automatic stay, preventing your creditors for calling, writing or attempting to collect the debt in any legal proceedings other than the bankruptcy action. Upon reviewing and investigating your petition, the bankruptcy court will determine if you qualify as a no-asset filer.
Contact an Experienced Rockwall, TX Bankruptcy Attorney
At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Kaufman County, Rockwall County, Collin County, Dallas County, Hunt County and the surrounding counties.