If your initial appraisal of the debtor’s asset-to-liability ratio indicates very little unencumbered or nonexempt property, and the Chapter 7 dividend is high, then one of the following is true:
- You have not exempted all of the assets you need to exempt. In this case, review Schedule C to identify any assets you forgot to claim as exempt.
For more information, see How do I edit assets in a client case? - You have not assigned the collateral to the appropriate liens. In this case, make sure that you’ve assigned collateral to all the secured debts.
For more information, see How do I edit liabilities?
Both actions reduce the amount available to unsecured creditors if a Chapter 7 were to be filed; that is, it reduces the Chapter 7 dividend. Zero percent (0%) might not be the final result—every case is different, and frequently a debtor has some asset that is unencumbered or nonexempt.