Which chapter of bankruptcy allows an individual to claim a total lack of assets?

Chapter 7 bankruptcy is designed for individuals who are unable to repay their debts and allows them to discharge most of their unsecured debts, effectively providing a fresh start. One of the key features of Chapter 7 is that it allows individuals to claim a total lack of assets, which means the debtor can go through a liquidation process without the expectation of repaying the debts.

Under Chapter 7, non-exempt assets are liquidated by a bankruptcy trustee, and the proceeds are used to pay creditors. If an individual has no substantial assets or income, they can qualify for this chapter, leading to the discharge of debts without the obligation to repay them. This option is particularly helpful for those who are in financial distress and possess little to no assets to alleviate their burdens.

In contrast, the other chapters serve different purposes: Chapter 11 is typically used by businesses to reorganize their debts while maintaining control of their operations, Chapter 13 is designed for individuals with regular income to create a repayment plan, and Chapter 5 deals with the rules surrounding bankruptcy cases but does not itself pertain to individual filings regarding asset claims. Thus, Chapter 7 is the most suitable choice for those claiming a total lack of assets.