Chapter 7 No Asset Cases

The majority of Chapter 7 bankruptcies in Alabama are no asset cases. A no asset case does not mean that the debtor doesn't own any assets; it simply means that the debtor does not own any non-exempt assets that can be seized by the Chapter 7 trustee and sold to pay the unsecured creditors. It is the experience of our Montgomery, Selma and Central Alabama bankruptcy attorneys that over 90% of the Chapter 7 bankruptcy cases that we file our no asset cases.

When a client files a Chapter 7 bankruptcy all of that client’s assets become property of the bankruptcy estate. The bankruptcy estate will include all the assets of that debtor and any interest that the debtor may have in real or personal property that has yet to be divided or given to him. It may also include any assets that he may come into having an interest in within the next 6 months.

After the Chapter 7 petition is filed, an impartial bankruptcy trustee is appointed to administer the case; if there are non-exempt assets then the trustee will take this property and will sell it. Most people do not have non-exempt property. Simply put, just because you file for Chapter 7 bankruptcy does it mean that the bankruptcy trustee is going to take all of your assets and sell these. Alabama has a set of exemption laws that allows the debtor to protect a certain amount of property. In so doing, these laws allow most people to keep all of their assets. This includes the interest that they have in their household goods, their cars and their home.

If the debtor can exempt all of his or her property, then this leaves the Chapter 7 trustee with nothing left to sell. This is what is referred to as a Chapter 7 no asset bankruptcy case. Once the trustee conducts a Section 341 Meeting of Creditors and realizes that there are no non-exempt assets, the trustee will then generally file a no asset report. By filing the no asset report, this states that the Chapter 7 trustee is stating to the bankruptcy court that the unsecured creditors will not receive anything through the Chapter 7 bankruptcy. Our Montgomery bankruptcy attorneys understand that the reasoning behind the exemption laws is that each person needs a certain amount of property, assets, and income to sustain one’s self. These assets are needed for the debtor to receive the fresh start. Though the Chapter 7 exemptions vary greatly from state to state, in Alabama each debtor can exempt up to $7,500 in personal property and $15,000 worth of equity in real estate. A person should not be intimidated or worried about these low amounts because the bankruptcy court has its own method of valuing property. It is not based upon what you paid for the item, but it is based upon what you could sell that item for at the exact moment the petition is filed. One way of looking at it for household goods, for example, would be how much would you receive if you sold all of your household goods at one yard sale on one Saturday. In our experience usually yard sales do not yield large sums of money. You can learn more about exemptions by looking at the web page on our website. While we agree that this can be a slightly confusing subject, our Montgomery, Selma, and Central Alabama bankruptcy attorneys deal with these issues daily, and we would be happy to review your current financial situation. Remember that all consultations are always free, and we can usually meet with you within 24 hours.

At The Sellers Law Firm, we are here to assist you! We have four offices located in Montgomery, Selma, Greenville, and Troy. We are located near you! Call or text us at 334-LAWYERS (529-9377) to set an appointment to meet our team. Our phone lines are answered 24 hours a day! You may also contact us by using the Contact Form on our website or by emailing us at bsellers@sellerslawfirm.com. Remember that doing nothing, changes nothing so act today!