What if I do not have assets to liquidate under Chapter 7 bankruptcy?

Be careful, no matter what Chapter of Bankruptcy you choose. Your best bet is to go to a bankruptcy attorney and have them run the means test to determine what Chapter to file. The means test is what determines whether you can file Chapter 7 or Chapter 13.

If you have any income at all, unless you have an overwhelming amount of debt, you will most likely end up in a Chapter 13. It's called the "wage earner plan" for that very reason. Even if youfeel you can't repay the debts in 5 years, it's possible that you will end up in Chapter 13, based on the means test.

When you say you don't have any assets to liquidate, do you mean you don't own a home, a car, or any personal possessions? There are exemptions in every state (they vary from state to state) for a certain percentage of the equity in your home, etc.

My assets include my cloths and my books... that's about it.

JB

What about a job - do you have one? I'm not sure how the courts handle an individual bankruptcy (you're not married, right?) with no assets at all. If you have income, however, the means test will still apply. Where your income falls in comparison with the median income for your area (set by the IRS) will determine what Chapter you file.

You need to study the new bankruptcy laws. They have changed quite a bit. Talk to a professional before you decide. This is a life altering decision.

ladybug

I too am currently considering bankruptcy and this is what I've learned so far. The so called 'difficult' new bankruptcy laws are mainly for those who have a relatively high median income (as determinded by the IRS and is based on the state you live on and how many are in your household). If you fall below then median, then filing bankruptcy is not difficult. What is difficult is proving that you can not afford to be put in the Chapter 13. The way this works is they take your monthly income, including support payments, disability, etc and subtract national and local standard amounts for housing, utilities, food, transportation, healthcare, ect for your particular sized household (one person, two people, etc) and come up with a total. They then take the amount of your owed secured payments (car, house, etc) and subtract that from the leftover amount and get the total $ leftover that could be applied to your debt. If the leftover amount is minimal or 0, then filing for Chapter 7 is an option. If there is $ left after all the subtractions, then more than likely you'll have to file Chapter 13.
Now, with Chapter 7 there are some things to consider. For the assets portion of things, there is something called non-exempt and exempt assets. Exempt assets are things like household goods, jewelry, books/computers used for work, certain $ amount of equity in a car, etc. There are federal and state standards for the exemptions and you have to use one or the other - you can use both federal and state. If your the average Joe Schmoe, then most of your stuff will fall in the non-exempt category and you won't have to liquidate anything to be your creditors. But is you own jewelry over, say $1200, fine art, expensive cars, etc, then the trustee will take that, sell it and distribute the proceeds to the creditors. And if you have a car loan or a mortgage, you will have to sign something called a reaffirmation agreement to keep the loan in place and to keep the car. It's basically just a guarantee that you still agree to pay for the asset per your orignina loan agreement. If you're the average person, than you should be able to file Chapter 7 without loss of assets. It'll stay on your records for 10 years, which can be a pain, but using your credit is what got you into the trouble so a break from it will do you good. Creditors tend to extend credit again after three years ago, but you will have to pay high interest. Doing this will also jack your car insurance premiums up and it could make it difficult to get a good job as most employers run credit histories on the candidates now. Also, if you higher an attorney, it can cost you upwards of $2000, average being around $1700. You can file by yourself, but there is ALOT of paperwork invovled and if you don't do it right and the referee throws it out, you can't refile for something like 6 months or 2 years (not sure about that one). I'm doing the same thing, so I completely understand. Good luck to you.

Correction - Average Joe Schmoe falls into the exempt category of assets...Sorry

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Great post there. I too, am in the middle of our bankrutpcy and the only thing I saw in your post that I differed with was that, UNLESS you CHANGE your auto insurance company, your premiums will not increase because of your bankruptcy. Even, if you moved and you had to change your insurance, there are many companys that do not base it on bankruptcy and some companys do. I have had mine for 15 years, and I heard this rumor and called them to ask and they verified that it would NOT effect my premiums.

Also, my husband floats job to job and he has never had an application ask about bankruptcy, nor has any employer did credit checks on him. Perhaps, if he was going to work for a Million dollar industry..they might would consider the fact.

:D

FILING BANKRUPTCY was the best thing I have ever done!
It is not the end of the world, life goes on. I reaffirmed our home, vehicle and that will boost our credit scores during the first two years post BK. I have student loans in my name that I am paying on and that increases our scores (so we won't be punched with high interest rates two years post BK.)

We are contemplating filing Chapter 7. We have had bad luck, my husband has had 3 back surgeries (big deduction on wgaes) I was laid off from my job of 13 years... We had re-financed a few times for credit card debt. Now, we are in the same boat... High credit card debt and alot of cash advances (gambling) and ONLY one income right now Workmans Comp(husband) and I am without a job or any income. What do yousuggest. Can they look at our credit card debt and say well, you used these cards and for a cash advance at the casin? I mean don't get me wrong, it is NOT ALL cash advances?

We gross 3600 per month income, it is not alot, but not poverty either and we were able to do a chapter 7! SO, just because you have income, don't be afraid to file for chapter 7.

It depends on the median income for your area. $43,000 may be under the median income for your state, but may not be in others. Chapter 7 is not guaranteed.

Thanks for the information, I was under the impression the median was nationwide! :o