What Is It? How Does the Bankruptcy Process Differ When There Are No Assets?
When you’ve determined that bankruptcy is your best path forward, you will have two potential options with respect to your personal debt. If you qualify for a Chapter 7 filing, you can petition the court to permanently discharge certain debts in exchange for the relinquishment of some of your property. If you are not eligible for Chapter 7, your only course of action is to reorganize or restructure your debt under Chapter 13.
How Chapter 7 Works
If you meet the requirements of the means test, you’ll be able to discharge most, but not necessarily all, of your debts under Chapter 7. That means you’ll no longer have any legal obligation to those creditors. Some debts, though, are difficult or impossible to discharge:
- Child support arrearages can never be eliminated.
- Student loan payments can be discharged only under very limited circumstances.
- Most tax debts are either not dischargeable or very difficult to discharge.
In exchange for the discharge of your debts, bankruptcy law requires you to relinquish non-exempt property to the bankruptcy court, to be sold to provide some payment to your creditors. Some property is exempt under federal law, and each state has its own exemptions. You may choose the exemptions under one or the other, but may not pick and choose from both. Texas exemptions are among the most liberal in the country. For that reason, most Texas filers opt for the Texas state exemptions.
What Is a No-Asset Bankruptcy?
Statistics confirm that most people who qualify for Chapter 7 have no valuable, non-exempt assets that the trustee would be able to sell to generate any compensation for creditors. Such cases are commonly referred to as “no-asset” bankruptcies.
How Does a No-Asset Chapter 7 Bankruptcy Differ from Other Chapter 7 Filings?
When there are potential assets that can be used to satisfy creditors, the court typically schedules a meeting of creditors (which you must attend), and requires each creditor to submit a proof of its claim against you. If any claims are disputed, or if there are liens on any property, the court is likely to hold hearings to resolve those matters.
In a no-asset bankruptcy, once the trustee confirms the absence of any redeemable property, the court will provide creditors with notice that there will be no payment of any debts and that the creditors need not file proof of their claims.
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 to discuss your rights and options in a bankruptcy, 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.
