Filing For Chapter 7 Bankruptcy: What Is A No-Asset Bankruptcy Case?

Debt is becoming a common four-letter word that plagues most American households, especially since the economy has been in recession for quite a long time now. The national U.S. debt is quickly approaching $18 trillion and the average household credit card debt is approximately $15,950. It is no wonder that there were a total of 619,069 chapter 7 bankruptcy filings in 2014. If you're considering filing for bankruptcy, chapter 7 may be the best option, as you will be freed of all debts as long as you surrender all of your assets. But, what if you have no assets? This is when a bankruptcy trustee files a no-asset bankruptcy case.

Understanding Exemptions that Are Made

When you file for chapter 7 bankruptcy, you are required to surrender all of your assets to a bankruptcy trustee. The bankruptcy trustee is responsible for negotiating payment terms and conditions with creditors, and to liquidate all of your assets to make the payments. However, to ensure that you can still properly sustain yourself and make a fresh start, all states have set up an exemption, which is an amount of assets that you can keep.

Each state will have its own regulations in regards to which assets are exempt. For example, in Oklahoma, you can exempt up to 1 acre of land if you live in a city, town or village or up to 160 acres if you live elsewhere. You can also exempt up to $4,000 worth of clothing, interest on college saving plans and more. Your bankruptcy trustee cannot touch these assets at all. 

No Assets Available After Exemptions

While the exemptions are designed to ensure that you can still sustain yourself after filing for bankruptcy, what if the amount of assets that you have accumulated does not exceed the amount that is exempted? This is when the bankruptcy trustee will file for a no-asset bankruptcy.

Under a no-asset bankruptcy case, you will still be responsible for paying the administrative fees involved for filing for bankruptcy; however, since all of your assets are exempt, all creditors that you owe an unsecured debt to will no longer be able to receive any form of compensation for the debts that you owe. These debts will simply be wiped clean from your financial history, and you will no longer be responsible for making payments, as long as the bankruptcy application is approved.


Those who have no assets at all are still able to file for bankruptcy in order to experience some financial relief from the debts that they owe. Even if you do have some assets that exceed the exempted amount, the bankruptcy trustee may still choose to abandon these assets, especially if the cost and time of selling the assets surpasses the revenue that can be used to pay back creditors.

Need more help? Have other questions? Contact a professional such as Attorney John A McLaughlin Jr PC for more information.