Bankrupt question..?

Question

my sister is filing for bankruptsy, and from what we have read about it, you sell your assets to cover your debts..but what if you have no assets? she and her husband have one car that they bought at an auto auction, and the house they live in is owned by my uncle. they don't own the furniture or any of it, no land or anything. they have no savings and her checking account is 146.16 over drawn right now. what happens if you have no assets to sell?

Answer 1

Then a chapter 7 is filed.

She will have to come up with money to pay the attorney and the filing fee. She will go to financial management class and her debts will be erased.

Answer 2

It depends what assests they have, and what form of bankruptcy you file - Chapter 11 vs. Chapter 13.  

I am not sure which is which, one is more like a debt consolidation and it is used to sell off assets to pay debt, the other once  you are out of assets it wipes out your debt - of course for the next seven to ten years you can not get any more credit, can not file again and most likely will not be able to purchase a house or car and even some new jobs may run credit checks.

You are allowed to keep a minimum amount of assets for the purpose of living - such as basic furniture and if the car has a small value they may be allowed to keep that as a car is needed for work.

Answer 3

My partners bankrupt, We also have no assest and rent our house, The only thing we do have is a car worth about £700, They didnt take that as my partner claimed he needed it to get to work, So they do nothing, Other than declare you bankrupt and free you from debt, It seems to complicated but its really not.

Answer 4

What your describing is a classic chapter 7.

They will have to pay the attorney, fill out some paperwork, go to credit counseling classes and then their debts will be dismissed.

They will not lose their car and their wages can not be garnished so don't even worry about that.

I went through it back in early 2001 and it's not the end of the world by any means.

As soon as mine was discharged I started to re-establish my credit using a couple of credit cards being careful never to exceed 30% of my credit limits and paying them off in full.

After a year I bought a brand new car with no money dawon at 3.9% interest, a year later I bought a new home again with no money down and a 6.5% fixed rate.

Now all of my scores are well over 750 and I can get approved for anything I want at the very best rates even though the BK still shows on my credit report.

So don't believe all of the gloom and doom stories you will hear, if your Sister and her Husband are smart they can come through this and be better off then they are now.

Answer 5

Dang...sorry for your sister. If you have no assets there's nothing that can be repossed. What can happen is that the car can be taken even if it's not in great shape and if they're working their wages can be garnished.

Hope things turn around for them.