Asset or No Asset Case

Any property a filing debtor has legal equitable interest in is considered to be an asset of the bankruptcy estate. Through the filing process, state and federal bankruptcy laws determine which assets a debtor has the legal right to exempt from bankruptcy liquidation. When a debtor has equitable interest in an asset that is not exempt from the liquidation proceeding, the bankruptcy is considered an "asset" case. A creditor holding an unsecured claim will get a distribution from the bankruptcy estate only if the case is an asset case, and the creditor files a proof of claim with the bankruptcy court.

If a debtor has little or no assets or an exemption for the asset, the bankruptcy filing is considered a no-asset case. Most Chapter 7 liquidation bankruptcies are no-asset cases. All non-exempt unsecured debt is discharged in a no-asset case. Asset cases are much more complicated, and debtors who want to keep certain assets may be forced to file Chapter 13 instead of Chapter 7. Some debtors who have no assets and who are considering filing Chapter 7 bankruptcy may be able to file without a bankruptcy lawyer.