Can You File Bankruptcy in Pennsylvania with No Assets?
A no-asset bankruptcy is only available through a Chapter 7 filing – the kind that usually requires the liquidation of your non-exempt property by the court. To avoid a sell-off for your cherished possessions to pay your creditors, every state in the country allows varying amounts of exclusions, including values for your primary residence, business equipment, and your car, to protect them from auction. A “no asset” filing maximizes these exceptions. Nevertheless, how can you be certain you’re covering all your bases? Our Pennsylvania bankruptcy lawyers tell all.
What is No Asset Bankruptcy?
When the chapter 7 trustee placed in charge of your assets by the court identifies that you have no vulnerable assets, they file “no asset” documentation. This means the state’s allowable exemptions cover the value of your real property and leave none left over for your creditors to receive. The trustee cannot auction off your exempt property, which means your creditors having debts discharged in your bankruptcy receive no money. The court washes the debt away, and you pay the creditors zero.
From the moment you file for bankruptcy, your property is no longer “yours” in the legal sense. Ownership of your assets transfers, temporarily, to the impartial trustee appointed by the court to oversee liquidation, if any occurs.
Just because you’re appealing to the court because your debts grossly outweigh your income does not mean you should have all your property stripped like a fire sale for a cash-strapped NFL franchise. You need certain amenities to continue living, from your clothes to a car so you can continue getting to work. Bankruptcy means a fresh financial start, not a deeper hole from which you must dig out of on your own.
What Debts Are Not Discharged in Chapter 7 Bankruptcy?
The court only expunges unsecured debts in Chapter 7 bankruptcy – all others survive the process. Secured creditors, including your mortgage company and student loan companies, still retain their accounts and may pursue you for the amounts owed once you emerge from bankruptcy. That includes any repossession actions, including foreclosure. You’re not completely out of the fiscal woods with your no asset filing, though removing all of your unsecured creditors – credit card companies, medical bills – from the mix should make it easier to pay your mortgage, if you have one.
Consider filing for Chapter 7 bankruptcy as a last resort. In many cases, attorneys working on your behalf can negotiate with creditors to settle your accounts for smaller amounts than you owe, and avoid the courtroom. The threat of your filing (and receiving nothing for the debt owed) may also make your creditors more willing to listen about proposed payment plans.
Our Pennsylvania Bankruptcy Lawyers Can Help
If you find yourself in financial distress, you just want help to get out of it. Contact our bankruptcy attorneys today to get the sound legal advice you deserve. Your future is on the line, so make the wisest possible choice to protect it. Call our Philadelphia bankruptcy attorneys today and we’ll develop an effective plan bring some light to the dark tunnel you find yourself in.