Ask a Bankruptcy Attorney: I Don’t Own Anything. Can I file Chapter 7?

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Q:  I want to file Chapter 7 bankruptcy and I should qualify because I don’t own anything, right?  The only thing I have is my car and my house.  I would pay all my bills now but I’m waiting on a lawsuit settlement that hasn’t come in yet.  –Amanda P.
A:  Ah….the old “I don’t own anything” scenario.  I hear this one a lot.  Let’s break down the question.
First, qualification for filing Chapter 7 depends largely upon your income and the result of the Chapter 7 Means Test.  The amount of debt you have and the amount of property you have are not factors in determining your eligibility to get into a Chapter 7, however, they may be factors in determining whether you want to file Chapter 7.
Next, if you truly don’t own anything, you would not be following up that statement with “the only thing I have is..”.  Owning a house or a car doesn’t automatically disqualify you from filing a Chapter 7, however, you must disclose these things to your attorney even if you don’t think they are worth a lot.  The attorney can make the determination whether anything you own, big or small, would be an asset and whether that asset can be protected in a Chapter 7.
Finally, some things that you don’t think are assets must be disclosed as assets on your bankruptcy petition.  Things like lawsuit proceeds you may receive in the future, money someone owes you or inheritances can be considered assets that may need to be disclosed.
Remember, just because you tell your attorney about something you have, that doesn’t mean you would lose that in a Chapter 7, however, not disclosing it could mean the attorney would not do what is necessary to protect the property.