A no asset case in a Chapter 7 bankruptcy is the usual goal
for a debtor. Why? A no asset case means you have no financial obligation to
the bankruptcy estate. Unlike a Chapter 13 bankruptcy where you must make
payments for three to five years.

WHO MAKES THE DETERMINATION OF A “NO ASSET” CASE?

The Chapter 7 Trustee will make the determination. When your
Chapter 7 bankruptcy case is filed, a Trustee will be appointed. The Trustee
will look at all of your assets listed in the bankruptcy schedules, your recent
tax returns, bank accounts, and your answers on the Trustee Information Sheet. The Trustee will also consider input from
creditors at the meeting of creditors or otherwise.

The Trustee is looking for non-exempt assets. Therefore, it
is necessary to properly claim exemptions for qualified property in Schedule C.
Exempt assets cannot be required to be turned over to the Trustee.

Typical non-exempt assets include upcoming tax refunds, 20%
of net wages owed at the time of filing, and non-exempt amounts in bank
accounts. Pre-bankruptcy planning by your bankruptcy attorney may include waiting
to file until you receive and spend your tax refund.

Less typical are home equity and vehicle values beyond the
exemption amount. This is becoming more common as an asset, however, due to skyrocketing
home and used car prices.

DO YOU ALWAYS WANT A NO ASSET CASE?

Sometimes it is better to file the case even though there
may be assets to administer. Filing to stop a wage or bank garnishment is an example.
Another is you may owe taxes that are non-dischargeable. Taxes are often given
priority in distribution. Hence, the money that is paid into the estate can be
used to pay off the taxes that are owed.

In any event, you need an experienced bankruptcy attorney to
determine the time to file and the necessary pre-bankruptcy planning.