So you are reading up on Chapter 7 Bankruptcies and you come across the term “no-asset case” and you wonder what that means. The vast majority of Chapter 7 cases filed in the United States are what we lawyers refer to as “no-asset cases”.
The focus in a Chapter 7 Bankruptcy case is on debtor’s assets. The vast majority of debtors are able to “exempt” (i.e. protect) their assets from creditors/chapter 7 trustee. When you exempt an asset, the asset cannot be taken by a trustee and used to pay your debts.
Now, if there are non-exempt assets that is a different story. Non-exempt assets are assets that debtor lists on the schedules and either doesn’t exempt or exempts the asset, trustee objects to the exemption, and a bankruptcy judge sustains trustee’s objection. If there are non-exempt assets, the Chapter 7 trustee’s job is to liquidate (sell) the asset and reduce the asset to money. This money can be then used to pay debtors creditors pro rata. This, of-course, would be an “asset case”. Chapter 7 trustees have up to two years to administer an asset case.
In the vast majority of Chapter 7 Bankruptcy cases, there are no assets to administer. In a case like this, the chapter 7 trustee files a No Asset Report with the bankruptcy court and asks the court to close the file. These are what we refer to as “no-asset cases”.
When the time is right, or when you are ready, reach out to Minnesota’s HIGHEST GOOGLE reviewed bankruptcy law firm at www.kainscott.com. To this day, we have never had a guest regret the decision to file bankruptcy and get their life back. But, they do regret waiting so long before they filed Chapter 7 Bankruptcy.