How does bankruptcy work if you have no assets?

If you do not have any surplus income and you have no assets, the cost of your bankruptcy will be fairly low and will likely be much less than you are paying today to keep ahead of your creditors. If you have no money because you are not working, a bankruptcy may not be necessary.

What do you lose when you declare bankruptcy?

While you are bankrupt, you will not have to make payments on most of your debts unless you have surplus income. Your creditors will not be able to contact you about your debts. Any lawsuits about your debt will stop. Your assets are things that you own that can be sold to help pay off your debts.

What does trustee look for in bankruptcy?

In addition to making sure that your paperwork is accurate and complete, the trustee will be on the lookout for omitted or undervalued assets, undisclosed income, fraudulently transferred property, and any other red flags that can benefit your creditors or indicate abuse of the bankruptcy process.

Can a car be abandoned in a bankruptcy?

Abandon the vehicle. The trustee will often abandon the car if money wouldn’t be available for creditors after selling it. The trustee must pay off the loan, the amount of your exemption, the costs of sale, and the trustee’s commission. If little or nothing would remain, the trustee will abandon it, and you’ll get to keep it.

What happens to your money when you file bankruptcy?

Money from the sale goes toward paying your creditors. The balance of what you owe is eliminated after the bankruptcy is discharged. Chapter 7 bankruptcy can’t get you out of certain kinds of debts. You’ll still have to pay court-ordered alimony and child support, taxes, and student loans.

Can you exempt a car from Chapter 7 bankruptcy?

If you have unprotected equity, the trustee can sell your car, give you your exemption amount, and distribute the remaining amount to your creditors. Example 1. Joseph owns a Toyota Corolla worth $7,000. He still owes $5,000 on his car note. His state allows debtors to exempt up to $5,000 in equity.

What happens to your property in Chapter 7 bankruptcy?

But, in Chapter 7 bankruptcy, you must give up your nonexempt property —anything you can’t protect with an exemption. The bankruptcy trustee —the person responsible for managing your case—will sell your nonexempt property and use the proceeds to repay your unsecured creditors.