Bankruptcy with No Assets in New York
When a debtor files for Chapter 7 bankruptcy, all or a portion of his or her outstanding debts are sometimes repaid via the liquidation of assets. However, debtors who file for Chapter 7 bankruptcy are permitted by law to keep certain property. This property, defined by law, is known as “exempt property.” Such property, as the name implies, is exempt from the bankruptcy process and may not be sold by the bankruptcy trustee to pay back creditors. Every state has its own list of exempt property, and some states allow debtors to utilize federal exemptions instead of those identified by the state.
Sometimes, a Chapter 7 debtor owns no nonexempt assets. When this occurs, no property is available to be sold by the bankruptcy trustee, and the debtor loses no property in his or her bankruptcy case. Such situations are known as “no-asset cases.” The majority of Chapter 7 bankruptcies are, in fact, no-asset cases. In a no-asset bankruptcy case, the bankruptcy trustee typically files a no-asset report in the case and the creditors are put on notice that they will not receive any proceeds through the bankruptcy. Since the trustee in a no-asset case doesn’t sell the property and distribute the proceeds to creditors, such cases are generally fairly straightforward.
No-Asset Chapter 7 Bankruptcy Filing Procedures
As described above, a no-asset case is basically a normal Chapter 7 bankruptcy case in which the debtor won’t lose any property. Therefore, the filing procedures for a no-asset case are exactly the same as a typical Chapter 7 bankruptcy case. The steps for initiating a no-asset bankruptcy case are as follows:
- File bankruptcy petition – Chapter 7 bankruptcy is initiated with a petition. In order for a bankruptcy petition to be approved by the court, the filer must pass what is known as the “means test” and take a credit counseling course.
- Automatic stay – Once a bankruptcy petition is filed, an automatic stay goes into effect. The automatic stay prevents creditors from engaging in collection activities during the pendency of the bankruptcy case.
- The meeting of the creditors – In all Chapter 7 bankruptcy cases, the debtor must attend a meeting of creditors. During this meeting, creditors do not typically appear, the bankruptcy trustee asks the debtor a series of questions concerning his or her debts and property.
- Discharge of debts – Upon the conclusion of the bankruptcy case, most of the debtor’s debts, with a few exceptions, are discharged.
Legal Representation in New York
If you are considering filing for Chapter 7 or Chapter 13 bankruptcy in New York, please contact an experienced New York bankruptcy attorney to discuss your situation. An experienced New York bankruptcy attorney will keep you apprised of your rights while ensuring that you understand all of your debt relief options. Please contact us for a free consultation.
More Articles You May Enjoy
The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law […]Read Post
This glossary of terms is designed to demystify the bankruptcy process and provide a brief […]Read Post
Most people who consider filing for bankruptcy worry about the effect that it will have […]Read Post