No-Asset Cases in Chapter 7 Bankruptcy
Generally, when someone files for Chapter 7 bankruptcy, they have few assets. It is required that they pass a means test, demonstrating their eligibility for Chapter 7. Most cases are no-asset cases, and individual debtors retain their property because it falls under exemptions stated by law. Asset cases are those cases where a debtor must give up property. At the Bankruptcy Center of Illinois, our Chapter 7 bankruptcy attorneys can determine whether your case is a no-asset case. We bring combined decades of experience to our legal representation of people throughout DuPage and nearby communities, and take pride in vigorously helping individuals find solutions to their financial needs.No-Asset Cases in Chapter 7 Bankruptcy
A no-asset case in Chapter 7 bankruptcy refers to a situation in which the debtor is entitled to retain property, valuables, and cash. As a liquidation bankruptcy, debtors give up their assets to the bankruptcy estate. These assets are used by the trustee to pay off creditors. Non-exempt property will be sold off, and the debtor is able to retain certain property. According to Chapter 7 exemptions, the property that may be retained is listed by state exemptions.
Creditors do not receive payment in a no-asset case because bankruptcy proceedings do not generate proceeds. Since most debts are discharged in a Chapter 7 bankruptcy, a creditor usually does not have an option to collect anything in the future.
When equity within a property is covered by an exemption, it is safe from the trustee. An example would be a vehicle worth $3,000 and a vehicle exemption that allows up to $4,000. In this example you would keep your vehicle. Exemptions may specifically apply to an asset such as a home, or a car. Others may be applied to different types of personal property; these are known as “wildcard exemptions.” When the equity in your property is not exempt, the trustee will sell the property to pay creditors.Features of No-Asset Chapter 7 Bankruptcy Proceedings
A bankruptcy case typically moves quickly when there are no-assets. This means the debtor will receive a discharge more quickly than if the trustee is required to assess and sell your property. Often, debts that you did not list on your initial bankruptcy schedule will still be discharged in a no-asset case. The general rule is that debts are enforceable and valid if you did not list them initially. In many no-asset Chapter 7 bankruptcy cases, debt is discharged even if it was not initially listed. The rationale is that the omitted creditor would not have received property or money in the no-asset bankruptcy if listed.Concealed Assets for Chapter 7 Bankruptcy
Unfortunately, some individuals feel they must attempt to conceal assets from a trustee so they will not be required to surrender them. Or, debtors may forget they have an asset and not disclose it. When a trustee discovers the asset, they may notify creditors. These creditors can collect on their debts by submitting proofs of claim.
If you have deliberately concealed an asset, you should speak with a bankruptcy attorney. There may be penalties involved, and your right to continue with your Chapter 7 bankruptcy can be challenged. A skilled lawyer can help you ensure that you appropriately disclose all your assets.Understand Your Bankruptcy Options by Speaking With a DuPage County Lawyer
Filing for bankruptcy is a major step for people facing financial stress. If you have a no-asset case in Chapter 7 bankruptcy, the dedicated DuPage County lawyers at the Bankruptcy Center of Illinois will help you understand how exemptions may apply to your property. Simply because you have a no-asset case does not mean you do not own property. Your property may be exempt, and that means your assets are covered or protected by exemptions. To learn more, call us directly at (773) 993-0024 or reach us online for a consultation.