New Jersey Federal Courts
New Jersey Bankruptcy Guide
Chapter 7 bankruptcy in the District of New Jersey — the means test, state exemptions, automatic stay, and the 3–6 month path to discharge.
For informational purposes only. Not legal advice.
Important: Bankruptcy law is federal law (11 U.S.C.). This guide covers Chapter 7 in the District of New Jersey. Every case is different. Consult a licensed New Jersey bankruptcy attorney for advice about your specific situation.
Chapter 7 bankruptcy — often called "liquidation" bankruptcy — discharges most unsecured debts (credit cards, medical bills, personal loans) in exchange for the bankruptcy trustee liquidating your non-exempt assets. In practice, the vast majority of New Jersey Chapter 7 filers are "no-asset" cases where all property is protected by exemptions and nothing is sold.
Bankruptcy is filed in federal court — the United States Bankruptcy Court for the District of New Jersey, which has divisions in Newark, Trenton, and Camden. The process typically takes 3–6 months from filing to discharge. New Jersey debtors use New Jersey state exemptions (not the federal exemption set) to protect property.
The Means Test: Are You Eligible for Chapter 7?
To qualify for Chapter 7, you must pass the Bankruptcy Means Test (11 U.S.C. § 707(b)(2)). The test has two steps:
Step 1 — Income Below Median
If your average monthly income over the past 6 months is below the New Jersey median incomefor your household size, you automatically pass. For 2026, the NJ median is approximately $7,200/month (single), $9,200/month (2-person), $10,800/month (3-person), $12,400/month (4-person). Check the official U.S. Trustee figures at the time of filing.
Step 2 — Expense Deductions
If your income exceeds the median, you complete the full means test (Official Form 122A-2), deducting allowed IRS expense standards for housing, food, healthcare, transportation, and secured debt payments. If your "disposable income" is below the threshold, you still qualify for Chapter 7.
Automatic disqualification: If you filed a prior bankruptcy case that was dismissed within the past 180 days due to willful failure to comply with court orders, or if you voluntarily dismissed a case after creditors sought relief from the automatic stay, you cannot refile. Check 11 U.S.C. § 109(g) for the full list.
New Jersey Bankruptcy Exemptions
New Jersey requires debtors to use the New Jersey state exemption system(N.J.S.A. 2A:17-56 et seq.). Unlike about half of all states, New Jersey does not allow debtors to choose the federal exemptions under 11 U.S.C. § 522(d). This significantly limits what you can protect:
NJ vs. Federal Exemptions: Because NJ has no homestead exemption, homeowners with equity in their property are at significant risk in Chapter 7. A bankruptcy attorney can help you evaluate whether a Chapter 13 repayment plan (which protects home equity) is a better option.
What Debts Can Be Discharged?
✓ Generally Dischargeable
- ✓Credit card debt
- ✓Medical and hospital bills
- ✓Personal loans (unsecured)
- ✓Utility bills
- ✓Most older income tax debts (3+ years)
- ✓Repossession deficiency balances
- ✓Some lease obligations
- ✓Civil judgments (non-fraud)
✗ NOT Dischargeable
- ✗Child support and alimony
- ✗Most student loans (absent undue hardship)
- ✗Recent income taxes (less than 3 years)
- ✗Criminal fines and restitution
- ✗DUI injury/death judgments
- ✗Debts from fraud or false pretenses
- ✗Debts from willful and malicious injury
- ✗Mortgage (still owe on home)
How to File Chapter 7 in New Jersey
File in the U.S. Bankruptcy Court for the District of New Jersey. Newark handles Bergen, Essex, Hudson, Morris, Passaic, Sussex, Union, and Warren counties. Trenton handles Burlington, Hunterdon, Mercer, Middlesex, Monmouth, Ocean, and Somerset counties. Camden handles Atlantic, Cape May, Cumberland, Gloucester, and Salem counties.
Complete Pre-Bankruptcy Credit Counseling
You MUST complete an approved credit counseling course within 180 days before filing. The course takes about 1–2 hours and can be done online. The approved provider list for NJ is at the U.S. Trustee website (justice.gov/ust). The certificate expires after 180 days — don't wait too long between completing the course and filing.
Gather Financial Documents
Collect: last 2 years' tax returns, last 6 months' pay stubs, bank statements (last 3 months), a list of all creditors and amounts owed, a list of all property you own with values, and documentation of any prior bankruptcy filings. Accuracy is critical — bankruptcy fraud is a federal crime.
Complete the Bankruptcy Petition and Schedules
File the Voluntary Petition (Official Form 101), Schedules A/B (property), C (exemptions), D/E/F (creditors), I/J (income and expenses), Statement of Financial Affairs, Statement of Current Monthly Income (Form 122A-1), and Chapter 7 Means Test (Form 122A-2 if required). These must be filed with the Bankruptcy Court. The filing fee is $338 (as of 2026). Fee waivers are available if your income is below 150% of the federal poverty level.
Automatic Stay Begins Immediately
Upon filing, an automatic stay (11 U.S.C. § 362) immediately stops most collection actions: creditor calls and letters, wage garnishments, bank levies, lawsuits, foreclosures (temporarily), and utility shutoffs. The automatic stay is one of the most powerful protections in bankruptcy. Creditors who violate it are subject to sanctions.
Attend the 341 Meeting of Creditors
About 30 days after filing, you must appear for a 341 Meeting of Creditors (named after 11 U.S.C. § 341). The meeting is conducted by the bankruptcy trustee — not a judge. You will be placed under oath and asked questions about your petition and finances. Creditors may appear but rarely do in consumer cases. The meeting typically lasts 5–15 minutes. You must bring a government-issued photo ID and proof of your Social Security number.
Receive Your Discharge
If no objections are filed, your discharge is typically entered 60–90 days after the 341 Meeting. The court issues a Discharge Order that legally eliminates your personal liability on dischargeable debts. You will also complete a Debtor Education Course (a 2-hour financial management course required before discharge). After discharge, collection agencies may no longer legally attempt to collect discharged debts.
Typical Chapter 7 Timeline in New Jersey
Credit counseling course (1–2 hours, approved provider)
File petition with District of NJ Bankruptcy Court ($338 fee)
Automatic stay begins — all collection actions stop immediately
341 Meeting of Creditors (trustee examines your finances under oath)
Trustee reviews assets — most cases are "no-asset" and closed quickly
Debtor education course must be completed
Discharge Order entered — debts legally eliminated
Case closed — credit report shows bankruptcy for 10 years
Free Legal Resources in New Jersey
South NJ
South Jersey Legal Services
856-964-2010
Free civil legal services including bankruptcy for low-income residents in South Jersey.
Northeast NJ
Legal Aid Society of NE NJ
973-624-4500
Free legal aid including bankruptcy matters for Essex, Union, and surrounding counties.
Statewide
NJ Bankruptcy Court Self-Help
njb.uscourts.gov
The District of NJ Bankruptcy Court has pro se resources and official forms at their website.
Required before filing
NJ Credit Counseling
justice.gov/ust
U.S. Trustee approved list of NJ credit counseling agencies for the required pre-filing course.
Related New Jersey Legal Guides
Need Chapter 7 Bankruptcy Documents?
Our New Jersey Chapter 7 Bankruptcy packet includes the Voluntary Petition, all required Schedules A–J, Means Test forms, Statement of Financial Affairs, and step-by-step filing instructions for the District of New Jersey.
Get the NJ Bankruptcy Chapter 7 Packet — $97Templates are for informational purposes only and do not constitute legal advice.
This guide is provided for general informational purposes only and does not constitute legal advice or create an attorney-client relationship. Bankruptcy law is federal law under 11 U.S.C. and is complex. New Jersey bankruptcy exemptions differ significantly from the federal exemption set. Consult a licensed New Jersey bankruptcy attorney for advice about your specific situation. Statute references are to 11 U.S.C. and N.J.S.A. as of 2026.