No Asset Bankruptcy

Liquidating assets can simplify the bankruptcy process.

Chapter 7 bankruptcy is designed to help individuals and businesses eliminate and pay off debts as quickly and efficiently as possible. Chapter 7 bankruptcy, also known as liquidation bankruptcy, occurs when a debtor requests to have applicable debts discharged, under protection of the bankruptcy court, in exchange for a liquidation of property and assets. Only property that is not subject to a fully secured lien or an exemption is at risk of being liquidated. For the majority of people filing for Chapter 7, there are no assets that are not protected by a lien or an exemption and the person keeps all the property they want.  In this situation, your assigned bankruptcy trustee will simply review your case and issue a no asset statement to the court.

For some people, they may choose to get rid of something they own.  A common example would be an automobile the person owns and still has a loan on the auto.  Perhaps the car is no longer functional but they still have a loan payment or they decide they can simply not afford the car payment any longer.  Chapter 7 allows the person to “surrender” or give back the car and no longer have to pay on the loan.

In order for a Chapter 7 bankruptcy to be accepted by the bankruptcy court and the person receive a discharge, a debtor must file a petition as well as a document outlining the debtor’s income, assets, expenses, debts, etc. Upon doing so they must also complete a means test in most cases, used to determine the debtor’s ability to pay back creditors.

From the moment your case is filed, an automatic order is in place called the “automatic stay”.  This order prohibits any creditor from taking action to collect on the debt including contacting you, sending you collection letters, suing you, garnishing your wages, or repossessing your property.  The automatic stay also will stop any pending lawsuits by creditors against you.  The debtor will be assigned a court appointed trustee, and it is the job of the trustee to collect as much money or property as possible to be sold, with proceeds going toward the debtor’s creditors. In cases of no- asset bankruptcy, the trustee will simply file a no asset report with the court.

Schedule Your Free Bankruptcy Consultation at Long, Burnett, and Johnson, PLLC

If you or your business is currently in more debt than is manageable, you need to contact us to discuss your options and best course of action. The attorneys at Long, Burnett, and Johnson, PLLC are exceptionally knowledgeable in all matters pertaining to finance and the law, and will work to have your debts eliminated and paid off as quickly and efficiently as possible.