The next letter in the Bankruptcy Alphabet is N, for No Assets. This is a very important concept in a bankruptcy case. In a Chapter 7, or full bankruptcy, case, the goal is to eliminate debts. In return, you provide the court with a list of all of your assets. An asset for purposes of bankruptcy is anything in the world that you own. This could mean your refrigerator, house, car, or even your cat or dog! Does this mean I’ll lose those things? No! What it means is that in order to petition the court for a Bankruptcy discharge to eliminate your debts, you have to let the court (and, in turn, those companies or people you owe money to) know everything you own. The good news is that everyone who files bankruptcy is allowed to protect a certain amount of assets with whatever their state allows (called exemptions). For example, in Illinois, people are allowed to protect all of their clothes (whew!), $4,000.00 worth of any other personal property (called the “wild card”), $2,400.00 worth of equity in a car, and $15,000.00 worth of equity in a house (these days, not too many people have any equity in their homes!). Equity is the current value minus the loan balance. This is not all of the exemptions, just a sampling of some of them.
Then, after you list all of the things you own, your attorney files the list (called schedules) with the court. The court assigns a bankruptcy trustee to review all of the schedules. Then, about 4-6 weeks later you go to a court hearing called “meeting of creditors” where the trustee asks a series of questions that you have to answer under an oath of truth. The trustee has a job to try to find out if you, the debtor, has any non-exempt (not protected) assets that can be sold and used to pay creditors. If the trustee is satisfied there is nothing valuable to sell, he or she will issue a report to the bankruptcy court saying there are “no assets” in your case. This is the result you want, in most cases. And, over 90% of all bankruptcy cases are “no-asset” cases. The trustee may want more information before deciding, or, the trustee may want to send an appraiser to your property to see what the property is really worth. But, in most cases, the trustee files the report, and then, a few months later, your case is closed, and the companies you owe (creditors) get nothing.
If there is a no-asset report, your case will most likely be successfully completed, and the court will issue a Discharge Order. If the trustee, in that rare case, decides to sell some of your assets, you might get a Discharge Order, but the case would remain open for the trustee to sell the assets and pay your bills.
It is important that you review all of your assets with an experienced bankruptcy attorney. Most cases are “no-asset” cases and people are able to keep everything they own. But much of how a case proceeds depends on full and complete honesty and disclosure of everything to your attorney. If you live in Northern Illinois or Southern Wisconsin, call the Law Offices of Daniel J Winter for a free consultation. We have offices in Chicago Loop, Skokie, Oak Lawn, Waukegan and Milwaukee, for your convenience.
Daniel J. Winter
Law Offices of Daniel J Winter
53W. Jackson Boulevard
For posts of other Bankruptcy Attorneys throughout the country contributing to the Alphabet Game, N: