What Is a No-Asset Bankruptcy in Texas?

 Posted on September 09,2024 in Chapter 7 bankruptcy

Chapter 7 bankruptcy normally involves having your assets liquidated to pay off as much of your debt as possible before the rest of your debt is cleared, whether or not you owned enough property to satisfy your debts. The advantage of Chapter 7 bankruptcy is that after liquidation, you do not owe anything else. Some assets are exempt from liquidation, and you can keep them despite the bankruptcy. So, what happens if every asset you own is exempt from liquidation? This is called a no-asset bankruptcy. Generally, this means that nothing is liquidated, and your debts can still be cleared. A San Antonio, TX bankruptcy attorney can help you protect your assets during bankruptcy.

Why No-Asset Bankruptcy Is So Common

Most people who are considering filing for Chapter 7 bankruptcy are struggling financially, often due to having lost a job or becoming ill and acquiring massive amounts of medical debt. Many individuals and families in this position have already depleted their savings, and some have even sold anything of value they own and do not truly need in order to stay afloat. This is especially true if you have not worked in quite some time and have dependents. Others, especially those who are young or who have been disabled for most of their adult life, have never owned assets beyond what would be considered exempt.

Which Assets Are Exempt? 

Liquidation is not meant to take everything you own. Creditors rarely want the hassle of seizing and selling assets that are not worth much, to begin with. Property that is considered exempt includes: 

• Most personal property - If you were to clear out your entire house of furniture, collectibles, electronics, and clothing, and sell it all, would you get more than $50,000, or more than $100,000 if you have a family? If the answer is no, you do not own any non-exempt personal property. 
• Your car- A vehicle is a necessity for getting to work, taking your children to school, and even for grocery shopping. Each member of your household who has a driver’s license can exempt one vehicle. However, if you still owe money on the vehicle, you can exempt your equity but would need to reaffirm the debt in order to keep the vehicle. 
• Retirement accounts and pensions - Tax-exempt retirement savings are generally protected. 
• Medical gear - Medical supplies, such as mobility aids, are exempt. 

Contact a San Antonio, TX Chapter 7 Bankruptcy Lawyer

Law Offices of Chance M. McGhee has more than 20 years of experience helping individuals and families through the bankruptcy process. Dedicated Bexar County, TX bankruptcy attorney Chance McGhee will do all he can to help your family find relief from debt without liquidation. Contact us at 210-342-3400 for a complimentary consultation.