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The bankruptcy process
No asset case
A no asset case is a Chapter 7 case in which there are no nonexempt assets available to pay any part of the unsecured creditors' claims. 1
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In Chapter 7, a trustee may sell a debtor's nonexempt property and pay the proceeds to creditors. If all of the debtor's assets are exempt or subject to valid liens, there is nothing to sell. The trustee will then normally file a "no asset" report with the court, and unsecured creditors receive no distribution. 2
The federal courts' guide to Chapter 7 says most Chapter 7 cases involving individual debtors are no asset cases. In a typical no asset case, creditors do not need to file proofs of claim, because nothing will be paid out. If the trustee later recovers assets, the court notifies creditors and gives them additional time to file claims. 2
No asset does not mean secured debts are unaffected. A secured creditor, such as a car lender, may still be able to take back the property that secures its loan. 2
Whether a case turns out to be a no asset case depends on what you own, what it is worth and which exemptions your state allows. 1
Common questions
Will I lose property in a no asset case?
Who decides that a case has no assets?
The Chapter 7 trustee, who normally files a no asset report with the court when all the assets are exempt or subject to valid liens. 2
Sources
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