November 21, 2017

Chapter 7 “No Asset” Case

The majority of cases filed under chapter 7 bankruptcy are considered “no asset” cases.  This post details what a “no asset” case is, and why we prefer this over an “asset” case.

When you file chapter 7 bankruptcy, everything you own, with few exceptions, becomes part of a “bankruptcy estate.”  To protect these assets as we travel down the road of chapter 7 bankruptcy, we use exemptions, or laws that protect your personal and  real property.  In Oregon, we can use Oregon Exemptions or Federal Exemptions to protect you from losing your property as a result of filing bankruptcy.  I have written several posts about exemptions, particularly the Federal Wild Card exemption. Using exemptions, the vast majority of chapter 7 bankruptcies are “no asset” cases, meaning your assets are protected and you won’t lose anything through the bankruptcy process other than debt.

The opposite of a “no asset” case is an “asset” case.  An “asset” case means that, despite using exemptions, all your property is not protected.  In such a case, the Chapter 7 Trustee will liquidate the asset and pay your creditors a dividend from this asset.  Other than real or personal assets that determine if a chapter 7 bankruptcy is  an “asset” case or a “no asset” case, certain transfers and “fraudulent conveyances” may form the basis of whether a case is an “asset” case or a “no asset” case.

An important part of your bankruptcy consultation is to determine not only your debts but also your assets.  If you have too many assets, or the value of an asset is too high, we can consider filing a chapter 13 bankruptcy or consider some pre-bankruptcy planning to help alleviate any potential problems with an “asset” case.

When do you find out if your case is an “asset” case or not?  Usually when you first meet with me, we make this determination and what planning is necessary to alleviate the possibility of an “asset” case, including, but not limited to, considering a chapter 13 bankruptcy filing.  Also, the Chapter 7 Trustee, at the conclusion of the meeting of creditors, will usually make the determination if your bankruptcy is an “asset” case or a “no asset” case.

There are additional benefits for having a “no asset” case.  For example, if you accidentally missed listing a creditor in a “no asset” case and you have already received your bankruptcy discharge, this creditor will be discharged by operation of law in the bankruptcy despite not receiving actual notice of the bankruptcy.  On the other hand, if the case is an “asset” case, then if you miss listing a creditor and have received your bankruptcy discharge, you will be stuck with this debt.

Please call to learn more about bankruptcy and whether your potential bankruptcy case may be an “asset” case or a “no asset” case.  I offer free in-office bankruptcy consultations in Eugene.

 

 

Pursuant to 11 U.S. Code § 528: "I am a debt relief agency. I help people file for bankruptcy relief under the Bankruptcy Code."

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