Frequently Asked Questions
Does my spouse have to file for bankruptcy too?
If I file for bankruptcy how will that affect my non-filing spouse?
Should I try to make deals with my creditors instead of filing for bankruptcy?
Do I have to pay taxes on forgiveness of indebtedness income (1099 Miscellaneous) if I file bankruptcy?
How long does the bankruptcy stay on your credit report?
Will the bankruptcy prevent me from getting credit in the future?
Will I be able to get a mortgage after I receive my bankruptcy discharge?
Does a previous bankruptcy prevent me from filing again?
What happens to my corporation, if I file personal bankruptcy?
What happens to me, if my corporation files bankruptcy?
What is the role of the Trustee?
How much will it cost to file for bankruptcy?
How long will the bankruptcy process take?
Will I lose my house, car, and other belongings if I file for bankruptcy?
What is the automatic stay?
What is a discharge?
What is the means test?
What are the credit counseling requirements for individual cases?
What is the meeting of creditors (341 meeting)?
What do I have to bring with me to the meeting of creditors (341 meeting)?
Q: Does my spouse have to file for bankruptcy too?
A: Not necessarily. At your free initial consultation the attorneys at Kasen & Kasen will evaluate whether or not bankruptcy is the right course of action to take, and, if so, whether both or just one of you needs to file.
Q: If I file for bankruptcy how will that affect my non-filing spouse?
A: Your bankruptcy will not go on your non-filing spouse's credit report. However, we will still need to include certain information regarding your non-filing spouse in your bankruptcy petition (e.g., income information, family household expenses, and information regarding jointly owned property).
Q: Should I try to make deals with my creditors instead of filing for bankruptcy?
A: We will be happy to discuss all alternatives to bankruptcy at your free initial consultation; however, we have found that credit consolidation typically does not work for several reasons. First, your creditors are not required by law to accept something less than what they are owed. Second, even if your creditors seem willing to make a deal, such a deal usually requires a lump sum payment. Third, interest on debts do not stop running until a deal is made. And Fourth, you may have to pay discharge of indebtedness tax.
Q: Do I have to pay taxes on forgiveness of indebtedness income (1099 Miscellaneous) if I file bankruptcy?
A: No, there is no discharge of indebtedness taxes for debts that were discharged through a bankruptcy.
Q: How long does the bankruptcy stay on your credit report?
A: Bankruptcy stays on your credit report for ten years; however, credit scores typically rebound within six months to one year of the date of your discharge. Bankruptcy does not prevent you from getting credit in the future. In fact, after bankruptcy, you are actually a better credit risk because someone who extends credit to you will not have to share your income with other creditors.
Q: Will the bankruptcy prevent me from getting credit in the future?
A: You should be able to get credit in the future so long as you show an ability to pay. After bankruptcy, you are actually a better credit risk because someone who extends credit to you will not have to share your income with other creditors.
Q: Will I be able to get a mortgage after I receive my bankruptcy discharge?
A: Yes, you will be able to get a mortgage after discharge. Government insured lenders require a waiting period of one to two years after discharge. For non-government insured lenders, there is no hard and fast rule as to when you will be able to get a mortgage. It depends on their lending policies and your ability to pay in the future.
Q: Does a previous bankruptcy prevent me from filing again?
A: If you received a discharge in a Chapter 7 or a Chapter 11 bankruptcy, you must generally wait 8 years from the date of the Chapter 7 or Chapter 11 filing in order to be eligible for a Chapter 7 discharge.
If you received a discharge in a Chapter 13 bankruptcy, you must generally wait 6 years from the date of the Chapter 13 filing in order to be eligible for a Chapter 7 discharge.
If you received a discharge in a Chapter 7 or a Chapter 11 bankruptcy you must generally wait 4 years from the date of discharge in order to be eligible for a Chapter 13 discharge. However, sometimes Chapter 13 bankruptcy can be used tactically, despite the fact that the debtor will not receive a discharge.
If you received a discharge in a Chapter 13 bankruptcy you must generally wait 2 years from the date of discharge in order to be eligible for another Chapter 13 discharge. However, sometimes Chapter 13 bankruptcy can be used tactically, despite the fact that the debtor will not receive a discharge.
Q: What happens to my corporation, if I file personal bankruptcy?
A: Since the corporation is a legal entity different and distinct from its shareholders, the bankruptcy of a shareholder does not affect the corporation.
Q: What happens to me, if my corporation files bankruptcy?
A: A corporate bankruptcy does not directly affect the shareholders. If the officers or shareholders are personally liable for the debts of the business, the automatic stay in the corporation's case does not prevent creditors from seeking to collect from others who may be liable.
Q: What is the role of the Trustee?
A: Chapter 7 trustees are appointed by the U.S. Trustee and their job is to administer the bankruptcy estate (liquidate assets, for the benefit of unsecured creditors, that are not fully liened or exempt by law). The Chapter 7 trustee assigned to your case will conduct your meeting of creditors.
Chapter 13 Standing Trustees are appointed by the U.S. Trustee and their job is to facilitate the completion of debtor's Chapter 13 plan. The Chapter 13 Standing Trustee for your geographical location (or one of their attorneys) will conduct your meeting of creditors.
U.S. Trustees are appointed by the U.S. Attorney General and they are in charge of supervising the administration of all bankruptcy cases. Roberta DeAngelis is the U.S. Trustee for Delaware, New Jersey and Pennsylvania.
Q: How much will it cost to file for bankruptcy?
A: At Kasen & Kasen, there is no fixed rate for handling bankruptcy matters for clients. The costs for filing for bankruptcy, including attorney fees, depend on the complexity of the matter involved. After your free initial consultation where we can evaluate your case,the attorneys at Kasen & Kasen will discuss all possible fees and costs.
Q: How long will the bankruptcy process take?
A: There is no single, fixed length of time for bankruptcy matters to be processed. A variety of factors affect how long a bankruptcy matter takes, such as whether the matter is contested, the type of bankruptcy filing, and the complexity of the matter.
At your free initial consultation, the attorneys at Kasen & Kasen will evaluate the specifics of your financial situation and will be able to tell you how long we expect the bankruptcy process to take for your case.
Q: Will I lose my house, car, and other belongings if I file for bankruptcy?
A: Generally, when you file for bankruptcy, you may claim certain exemptions under state law that will allow you to hold onto certain types of real and personal property. The vast majority of bankruptcy cases are "no asset" cases, in which the debtors have claimed an exemption in everything they own, and therefore the debtor gets to keep all of their real and personal property.
Q: What is the automatic stay?
A: The automatic stay is a temporary injunction that goes into effect automatically upon the filing of a bankruptcy. It strictly prohibits the commencement or continuation of any acts to collect on debts that arose prior to filing the bankruptcy (with limited exceptions). This includes harassing phone calls, letters, lawsuits, enforcement of judgments, foreclosures, garnishments, creating or perfecting liens, and many other actions.
Q: What is a discharge?
A: A discharge is an order issued by the bankruptcy court after the bankruptcy process which turns the temporary injunction that you got with the automatic stay into a permanent injunction, whereby creditors are now permanently barred from any acts to collect debts that arose prior to filing the bankruptcy (with limited exceptions). The same order also legally voids the debts.
Q: What is the means test?
A: The means test is generally a method of determining whether a debtor is eligible to file for relief under Chapter 7 bankruptcy. Generally, a debtor who has more than a certain level of income is not eligible to file for Chapter 7. A qualified bankruptcy attorney can calculate your gross monthly income for the last six months and determine whether this amount is less than your home state's median income level for the same size family. If the amount is less than the state's median income level, you may be eligible.
Q: What are the credit counseling requirements for individual cases?
A: For individual cases, debtors must complete two credit counseling requirements (debtor education courses). The first credit counseling requirement must be completed prior to filing your bankruptcy petition. It is done online and takes about an hour to complete. The second credit counseling requirement must be completed after filing your bankruptcy petition, but prior to discharge. It is done online and take about two hours to complete.
Q: What is the meeting of creditors (341 meeting)?
A: The meeting of creditors takes place after filing your bankruptcy petition. The meeting is conducted by a trustee or other examiner, and the debtor is questioned under oath about their financial affairs. Creditors are invited to come and ask questions, but rarely do.
Q: What do I have to bring with me to the meeting of creditors (341 meeting)?
A: Each individual debtor must bring with them a government issued photo ID and proof of their social security number. *note- a tax return with your social security number is not sufficient proof of your social security number.