Simply stated, a Chapter 7 bankruptcy with no assets case is just that, no assets involved. This means is that you, the filer, own nothing of value for creditors to liquidate. It does need to be understood that engaging in a no asset Chapter 7 is almost as much work as filing chapter 13.
The Basic Premise of Chapter 7
Chapter 7 bankruptcy allows the debtor to walk away from their debts and gives them a chance to start fresh. All debts will be discharged upon completion and you are now free to start over financially. Creditors will no longer be able to collect money after discharge.
Defining What Is Meant By Assets
Anything you own may be considered an asset. That includes every article of clothing you wear. You may own an older desktop PC or laptop. Or you drive a car that was paid off, still runs, but isn't worth much more than the metal it's made from. And instead of owning a home, you rent an apartment.
Write down everything that you own, even if you don't think it has a value. It does, but it may be little or next to nothing. Imagine that you're having a garage sale right then and there, and think of what someone might pay for that item. You may have recently splurged on a brand new electronic item and not know its value. Check a site like Craigslist to determine a resale value on the same or similar items. Contact a wrecking company and ask them for a valuation on your vehicle. They should be able to provide you with a print out that shows what the current crush value of your vehicle is.
Keeping Your Assets Through Exemptions
Once you have valuations for the items you own, you will now need to enter them as exemptions on schedule C. Each state is different with how they value and allow for exemptions. It will need to be determined if you can use the federal or state exemptions. Only a few states that will allow for the use of federal exemptions and those may not give much of an advantage. Exempting these items correctly creates the desired no asset case. Your creditors will see that there is nothing available for liquidation.
Hiring A Bankruptcy Lawyer
You may hear people tell you that a no asset Chapter 7 is easy and that you don't need a lawyer. Listen to them at your own peril. An experienced attorney will know what exemptions you can use, how to best value your assets and work as your advocate during the 341 meeting. Hiring a bankruptcy lawyer takes weight off of your shoulders, making sure that you'll make it through from filing to discharge.