New Jersey Bankruptcy Guide 2026
This content is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for advice specific to your situation.
Chapter 7 bankruptcy can eliminate most unsecured debts and give you a fresh start. This guide explains how Chapter 7 works in New Jersey.
Quick Facts: Chapter 7 Bankruptcy in New Jersey
| Item | Details |
|---|---|
| Filing Fee | $338 (can be waived or paid in installments) |
| Credit Counseling | Required before filing |
| Debtor Education | Required after filing |
| Discharge Timeline | 4–6 months typically |
| Income Limit | Must pass means test |
What Is Chapter 7 Bankruptcy?
Chapter 7 is a liquidation bankruptcy that:
- Eliminates most unsecured debts (credit cards, medical bills, personal loans)
- Stops wage garnishment and collection calls
- Allows you to keep exempt property
- Typically takes 4–6 months from filing to discharge
Debts Eliminated (Dischargeable)
- Credit card debt
- Medical bills
- Personal loans
- Utility bills
- Old tax debts (some)
- Payday loans
Debts NOT Eliminated (Non-Dischargeable)
- Student loans (rare exceptions)
- Recent taxes
- Child support and alimony
- Criminal fines and restitution
- Debts from fraud or intentional injury
- DUI-related debts
Who Qualifies for Chapter 7 in New Jersey?
The Means Test
You must pass the means test to file Chapter 7:
- If your income is below New Jersey's median income, you automatically qualify
- If your income is above the median, you must show you cannot afford a Chapter 13 repayment plan
New Jersey Median Income (2026)
| Household Size | Annual Income Limit |
|---|---|
| 1 person | ~$72,000 |
| 2 people | ~$89,000 |
| 3 people | ~$108,000 |
| 4 people | ~$130,000 |
| Each additional person | Add ~$9,000 |
Other Requirements
- Must complete credit counseling within 180 days before filing
- Cannot have had a bankruptcy discharge in the last 8 years (Chapter 7) or 4 years (Chapter 13)
- Must file all required tax returns
New Jersey Bankruptcy Exemptions
New Jersey allows you to choose either federal exemptions or New Jersey state exemptions (not both).
New Jersey State Exemptions
| Property | Exemption Amount |
|---|---|
| Homestead | Unlimited (but limited in practice) |
| Motor Vehicle | Up to $4,000 equity |
| Household Goods | Up to $1,000 per item |
| Wearing Apparel | Reasonably necessary |
| Tools of Trade | Up to $1,000 |
| Wages | 90% of earnings |
Federal Exemptions (Alternative)
| Property | Exemption Amount |
|---|---|
| Homestead | Up to $27,900 |
| Motor Vehicle | Up to $4,450 |
| Household Goods | Up to $14,875 total |
| Tools of Trade | Up to $2,825 |
| Wildcard | Up to $1,475 (plus $13,950 of unused homestead) |
The Chapter 7 Process in New Jersey
Step 1: Credit Counseling
- Complete an approved credit counseling course
- Must be done within 180 days before filing
- Cost: ~$15–$50 (fee waivers available)
Step 2: Gather Documents
- Tax returns (last 2 years)
- Pay stubs (last 6 months)
- Bank statements
- List of all debts and assets
- Vehicle and property documents
Step 3: File the Bankruptcy Petition
- File with the U.S. Bankruptcy Court for the District of New Jersey
- Pay $338 filing fee (or apply for waiver/installment plan)
- An automatic stay goes into effect immediately
Step 4: Attend the Meeting of Creditors (341 Meeting)
- Held 30–40 days after filing
- Trustee asks questions about your finances
- Creditors may attend but rarely do
- Bring: ID, Social Security card, bank statements, tax returns
Step 5: Complete Debtor Education
- Must complete a financial management course
- Must be done before discharge
- Cost: ~$10–$50
Step 6: Receive Your Discharge
- Typically 60–90 days after the 341 meeting
- Most unsecured debts are eliminated
- Case is closed
New Jersey Bankruptcy Court Locations
District of New Jersey — Camden Division
- Address: 401 Market Street, Camden, NJ 08101
- Phone: (856) 757-5010
- Counties Served: Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Salem
District of New Jersey — Newark Division
- Address: 50 Walnut Street, Newark, NJ 07102
- Phone: (973) 645-2200
- Counties Served: Bergen, Essex, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union, Warren
District of New Jersey — Trenton Division
- Address: 4002 East State Street, Trenton, NJ 08609
- Phone: (609) 989-2030
- Counties Served: Mercer County cases
What Happens to Your Property?
Secured Debts (Car, Home)
You have three options:
- Reaffirm — Keep the property and continue payments
- Redeem — Pay the current value in a lump sum
- Surrender — Give up the property, debt is discharged
Non-Exempt Property
The trustee may sell non-exempt property to pay creditors. In most Chapter 7 cases, all property is exempt.
How Bankruptcy Affects Your Credit
- Chapter 7 stays on your credit report for 10 years
- You can start rebuilding credit immediately after discharge
- Many people receive credit offers within months of filing
- Credit score typically recovers within 2–3 years
Legal Aid Resources in New Jersey
| Organization | Phone | Services |
|---|---|---|
| Legal Services of New Jersey | (888) 576-5529 | Free help for low-income |
| NJ Bar Lawyer Referral | (732) 249-5000 | Low-cost consultations |
| NJ Bankruptcy Court Self-Help | (856) 757-5010 | Court information |
Alternatives to Bankruptcy
Before filing, consider:
- Debt negotiation — Settle debts for less than owed
- Debt management plan — Work with credit counseling agency
- Chapter 13 bankruptcy — Repayment plan over 3–5 years
Next Steps
- Take credit counseling — Required before filing
- Gather financial documents — Tax returns, pay stubs, statements
- List all debts and assets — Complete disclosure required
- File petition — With District of New Jersey Bankruptcy Court
- Attend 341 meeting — Meet with trustee
- Complete debtor education — Required for discharge
Get New Jersey Bankruptcy Documents
jurisdiction-correct New Jersey Chapter 7 bankruptcy documents from Jurist-Diction include petition forms, schedules, and instructions — starting at $97.
Templates are for informational purposes only and do not constitute legal advice. For legal advice, contact a licensed attorney or Legal Services of New Jersey at (888) 576-5529.