Can I File for Chapter 7 Bankruptcy without Any Assets?
If you are considering Chapter 7 bankruptcy as an individual or consumer bankruptcy filer, you may have a general sense of how this type of bankruptcy works. Broadly speaking, in a personal Chapter 7 bankruptcy case, the debtor will file a bankruptcy petition along with a range of “schedules” that provide the court with details about their income and assets, and all non-exempt assets will be liquidated so that creditors can receive some repayment of the debts they are owed. In exchange for their non-exempt assets being liquidated, the debtor receives a discharge of eligible debts, meaning that the debtor will no longer be liable for those debts. Accordingly, the debtor gets a fresh start.
Yet you may be wondering if you can file for Chapter 7 bankruptcy if you essentially have no assets that can be liquidated. Can you still be eligible for a discharge if your creditors will not be receiving any payment from asset liquidation? No-asset bankruptcies under Chapter 7 are more common than you might think. Our West Palm Beach bankruptcy lawyers can tell you more.
Limited Assets for Passing the Chapter 7 Bankruptcy Means Test
As a consumer filing for Chapter 7 bankruptcy, you must first pass the “means test.” This test is a calculation you must do to show that your income and assets are limited enough that it would not be an abuse of the bankruptcy system to allow you to file for a liquidation bankruptcy under Chapter 7 (debtors who cannot pass the means test must instead file for reorganization bankruptcy, usually under Chapter 13 for individuals).
The means test calculation asks for various financial details, including your monthly disposable income, household data, your monthly household bills and other expenses, your vehicles, and more. The official form for providing all of this financial information is used to let the court know whether or not there is a presumption of abuse — i.e., whether or not you pass the means test and are eligible for Chapter 7 bankruptcy. Given that passing the means test requires an individual’s disposable income to be sufficiently limited, it is common for individuals to have relatively few, if any, significant assets.
No-Asset Chapter 7 Bankruptcy Cases
No-asset cases for individuals are relatively common, and what this means is that all of the debtor’s assets are exempt according to Florida’s bankruptcy exemptions. To be clear, any assets you own that qualify for one of the exemptions recognized in Florida will not be part of any liquidation. Exempt assets include equity in your home, retirement accounts and benefits, insurance policies, and personal property of up to either $1,000 or $4,000 in value (depending on whether or not you use the homestead exemption to exempt equity in your home).
If all of your assets are exempt, you will have a no-asset case, and your creditors will not be repaid. You can still receive a discharge of eligible debts in a no-asset case, and creditors will be informed that they will not receive any portion of the debt they are owed.
Contact Our West Palm Beach Bankruptcy Attorneys Today
If you have any questions about filing for Chapter 7 bankruptcy in South Florida, or if you want to learn more about your bankruptcy options, it is important to reach out to a bankruptcy attorney who can help. An experienced West Palm Beach bankruptcy lawyer at Kelley, Fulton, Kaplan & Eller can speak with you today to learn more about your financial circumstances and to provide you with more information about filing for individual bankruptcy in Florida. Contact our firm today for assistance.
Sources:
law.cornell.edu/uscode/text/11
justice.gov/ust/means-testing
leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/0222ContentsIndex.html
