How to File Chapter 7 Bankruptcy in New Jersey

To file Chapter 7 bankruptcy in New Jersey, you pass a means test tied to the state’s median income, finish an approved credit counseling course within 180 days before filing, choose between New Jersey’s exemptions and the federal set, and submit your petition to the U.S. Bankruptcy Court for the District of New Jersey along with a $338 filing fee. Most straightforward cases end with a discharge order roughly three to four months later. Attorney fees typically run $800 to $3,000 if you hire one.

Step 1: Qualify Through the Means Test

The means test decides whether your income is low enough to wipe out debts in Chapter 7 rather than repay them in a Chapter 13 plan. It compares your average monthly household income over the six months before filing to the median income for a household your size in New Jersey.

As of November 2025, New Jersey’s median income thresholds for the means test are:

  • One earner: $84,938
  • Household of two: $104,136
  • Household of three: $133,620
  • Household of four: $163,817

Add $11,100 for each additional person beyond four.1United States Department of Justice. Median Income Table – November 1, 2025

Fall below the median and you pass. Above the median, the test moves to a second step: subtract allowable living expenses from your income to project your disposable income over 60 months. A presumption of abuse arises if that 60-month total equals or exceeds the lesser of 25 percent of your nonpriority unsecured debts (with a floor of $10,275) or $17,150.2Office of the Law Revision Counsel. 11 USC 707 – Dismissal of Case or Conversion to Case Under Chapter 11 or 13 If your leftover income after expenses is small enough, you still qualify.

One shortcut matters. The means test only applies when your debts are primarily consumer debts. If more than half your debt is business-related, you can file Chapter 7 regardless of income.2Office of the Law Revision Counsel. 11 USC 707 – Dismissal of Case or Conversion to Case Under Chapter 11 or 13

Step 2: Complete Credit Counseling

Federal law requires two courses, one before filing and one after.

The pre-filing credit counseling briefing has to come from a nonprofit agency approved by the U.S. Trustee Program, and you have to complete it within 180 days before filing.3Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor The session reviews your budget and bankruptcy alternatives, takes about an hour, and costs roughly $50 to $75. Most agencies offer phone or online sessions. You will get a certificate, and it has to be filed with your petition or the case gets dismissed.4United States Department of Justice. Credit Counseling and Debtor Education Information

The second course, personal financial management (sometimes called debtor education), is taken after you file but before discharge. Fees are usually under $15. The court will not enter your discharge without the second certificate, so do not let it slide.

Step 3: Choose New Jersey or Federal Exemptions

Exemptions are the rules that keep the trustee from selling your essential property to pay creditors. New Jersey lets you pick between the state’s own exemption list and the federal bankruptcy exemptions. You have to pick one system for the whole filing. No mixing.

For most New Jersey filers, the federal exemptions protect more. Here is why.

New Jersey State Exemptions

New Jersey’s list is thin. There is no homestead exemption, so home equity gets no state-level protection. There is no motor vehicle exemption either. Household goods and furniture are protected up to $1,000 total, and clothing is fully exempt. Earned but unpaid wages are 90 percent exempt if your annual income is under $7,500, with less protection at higher incomes. Public pensions for teachers, police, firefighters, and other state and local government employees are fully protected, as are workers’ compensation, unemployment, disability benefits, and most life insurance proceeds.

Federal Bankruptcy Exemptions

The current federal amounts, effective for cases filed between April 1, 2025, and March 31, 2028, include:

  • Homestead: $31,575 in equity in your primary residence ($63,150 for married couples filing jointly)
  • Motor vehicle: $5,025 in equity
  • Household goods: $800 per item, up to $16,850 total
  • Wildcard: $1,675 in any property, plus up to $15,800 of any unused homestead exemption

The wildcard matters most if you rent. An unused homestead exemption can be shifted into the wildcard for up to $17,475 of protection applied to anything, including cash in a bank account or a tax refund.

Step 4: Gather Documents and Prepare the Forms

The court wants a detailed financial snapshot. Incomplete filings cause delays or dismissal. Pull together:

  • Pay stubs for the six months before filing, plus your most recent federal tax returns (usually the last two years)
  • Real estate deeds, vehicle titles, bank statements, and investment or retirement account statements
  • Credit card statements, medical bills, loan agreements, collection letters, and any court judgments against you
  • Monthly expense details for housing, utilities, food, transportation, insurance, and childcare

This information fills the official forms: the Voluntary Petition, Schedules A/B through J (property, secured debts, unsecured debts, income, and expenses), the Statement of Financial Affairs, and the means test calculation. All current forms are on the U.S. Courts website.5United States Courts. Chapter 7 – Bankruptcy Basics

Step 5: File With the U.S. Bankruptcy Court for the District of New Jersey

Chapter 7 cases go to the U.S. Bankruptcy Court for the District of New Jersey, which has courthouses in Newark, Trenton, and Camden.6United States Bankruptcy Court for the District of New Jersey. United States Bankruptcy Court for the District of New Jersey Filers without an attorney typically submit the petition and supporting documents in person.

The filing fee is $338.7Office of the Law Revision Counsel. 28 USC 1930 – Bankruptcy Fees If you cannot pay it all upfront, you have two options:

What Happens After You File

The Automatic Stay Kicks In Immediately

The moment the petition is filed, a federal injunction called the automatic stay takes effect and stops most creditor actions: wage garnishments, collection calls, pending lawsuits, and foreclosure proceedings.9Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay It is not absolute. Child support and alimony collection, some tax proceedings, and criminal cases continue. If you had a prior bankruptcy case dismissed within the past year, the stay may be limited to 30 days or may not take effect at all without a court order.

A Trustee Reviews Your Case

The court assigns a bankruptcy trustee to review your petition, investigate your finances, and identify any non-exempt assets worth selling. Most Chapter 7 cases in New Jersey are “no-asset” cases, meaning nothing is left to liquidate once exemptions are applied. If the trustee does find non-exempt property, you may have the option to pay the trustee its value and keep it.

The 341 Meeting of Creditors

Within roughly 21 to 40 days of filing, the court schedules the meeting of creditors, called a 341 meeting. Creditors rarely attend. You, the trustee, and your attorney (if you have one) are the usual participants. The trustee asks questions under oath to verify what is in your filing.10United States Department of Justice. Section 341 Meeting of Creditors Bring a government-issued photo ID and proof of your Social Security number. The meeting itself usually takes about ten minutes if your paperwork is in order.

Deciding What to Do With Secured Property

If you want to keep a financed car or other secured property, you may need to sign a reaffirmation agreement. This is a voluntary contract keeping you personally liable for a specific debt despite the discharge. The lender keeps its lien, you keep the property, and you keep paying.

Reaffirmation carries real risk. Fall behind after the case closes and the lender can repossess the property and sue you for any remaining balance, with no bankruptcy protection on that debt. The agreement has to be filed before discharge, and you have a 60-day window after filing it (or until discharge, whichever is later) to rescind.11Office of the Law Revision Counsel. 11 USC 524 – Effect of Discharge If you filed without an attorney, the court has to hold a hearing to confirm the agreement does not impose an undue hardship.

Not every lender insists on reaffirmation. Some will let you keep the property as long as payments stay current. Your Statement of Intention, filed with the petition, tells the court and your lenders what you plan to do with each piece of secured property: reaffirm, surrender, or redeem.

Debts That Survive Chapter 7

Chapter 7 wipes out most unsecured debt, but several categories are excluded from discharge.12Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge The ones that catch filers off guard most often:

  • Child support and alimony survive bankruptcy completely.
  • Government-backed and qualified private student loans are not discharged unless you prove “undue hardship” in a separate court proceeding, which is a deliberately high bar.
  • Income tax debt can sometimes be discharged, but the return must have been due more than three years before filing, actually filed more than two years before filing, and assessed more than 240 days before filing. Tax debt tied to fraud or evasion is never dischargeable.
  • Money obtained through fraud or misrepresentation cannot be wiped out.
  • Debts for death or personal injury caused by driving while intoxicated survive.
  • Charges to a single creditor exceeding $900 for non-essential goods or services within 90 days of filing are presumed non-dischargeable.
  • Property settlement debts to a spouse or former spouse from a divorce (beyond support) are also excluded.

A discharge also does not remove liens on secured property. Even if the underlying debt is wiped out, a mortgage lender or car lienholder can still enforce the security interest against the collateral.5United States Courts. Chapter 7 – Bankruptcy Basics

Getting Your Discharge and What Comes Next

If no one objects, the court typically enters the discharge order about 60 days after the first date set for your 341 meeting. The discharge permanently bars creditors from collecting on any debt that was eliminated.

A Chapter 7 bankruptcy stays on your credit report for up to 10 years from the filing date.13Consumer Financial Protection Bureau. How Long Does a Bankruptcy Appear on Credit Reports? Practical impact fades well before that. Many filers see credit card offers within months of discharge, and scores often recover meaningfully within two to three years of responsible use.

Your discharge only erases your personal obligation. If someone co-signed a loan or credit card, creditors can still pursue that co-signer for the full balance. Chapter 7 has no co-debtor stay. Chapter 13 does, which can matter if protecting a co-signer is a priority.

You cannot get another Chapter 7 discharge until eight years have passed from the filing date of the previous Chapter 7 case. The clock runs from filing date to filing date, not from the earlier discharge.14Office of the Law Revision Counsel. 11 USC 727 – Discharge After a prior Chapter 13, the wait for a new Chapter 7 is six years, with exceptions if you paid unsecured creditors in full or paid at least 70 percent in good faith.