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Filing for Chapter 7 bankruptcy in New Jersey is a big decision. It can give you a clean slate by wiping out many unsecured debts like credit cards and medical bills. In a Chapter 7 case, a trustee may sell certain assets to pay creditors, and many people keep most or all of their essential property through exemptions. You get real breathing room.
If you are thinking about this option, a New Jersey Chapter 7 bankruptcy attorney can walk you through each step, explain Chapter 7 limitations, and help you see what fits your situation. The New Jersey bankruptcy lawyers at Straffi & Straffi Attorneys at Law can listen, explain your choices in plain language, and help you move toward financial recovery.
For anyone looking to clear their debts and regain financial stability, connecting with Straffi & Straffi Attorneys at Law can be the first step toward achieving your financial goals.
Contact us today at (732) 341-3800 to discuss how we can assist you with your Chapter 7 bankruptcy filing and help you move towards financial well-being.
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Chapter 7 bankruptcy, often referred to as “liquidation” or “straight” bankruptcy, is a fundamental legal process designed to provide relief to individuals and businesses overwhelmed by debt. Chapter 7 bankruptcy allows debtors to discharge most of their unsecured debts, such as credit card debt, medical bills, and personal loans, through the liquidation of their non-exempt assets. The process is overseen by a bankruptcy trustee who sells the debtor’s non-exempt assets to pay off creditors. It’s important to note that in Chapter 7, certain assets can be protected from liquidation under state-specific exemption laws.
Chapter 7 solves specific money problems that keep you up at night. If most of your bills are unsecured, this chapter can wipe them out and give you a clean slate. Think credit cards, medical bills, personal loans, payday loans, and past-due utilities. These debts are typically discharged at the end of the case, which permanently stops collection on them.
Filing also triggers the automatic stay. From the moment your case is filed, most lawsuits, wage garnishments, collection calls, repossessions, and even shutoff threats have to stop. That breathing room lets you focus on getting through the process without the daily pressure.
There are limits. Chapter 7 will not clear support obligations, most student loans, recent income taxes, or criminal fines. Those usually survive the discharge. An attorney can flag these early, so you know exactly what relief you will and will not get.
Secured debts are different. If you are behind on a car or mortgage, the stay pauses foreclosure or repossession for a time, but it may not be permanent. You might keep a vehicle by reaffirming the loan or redeeming the car, yet Chapter 7 does not create a plan to catch up on a mortgage. We can talk through realistic keep-or-surrender options for your budget.
Timing matters too. Chapter 7 erases qualifying debts you had before filing, not new charges you take on after the case starts. Careful planning here protects your fresh start.
In short, Chapter 7 can erase heavy unsecured debt, stop aggressive collection, and let you reset. Your New Jersey bankruptcy lawyer can evaluate your debts, protect what you are legally allowed to keep, prepare accurate papers, and guide you from filing to discharge.
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The means test is a critical component in the Chapter 7 bankruptcy filing process, designed to determine whether an individual’s income is low enough to qualify for this type of bankruptcy relief. The test was implemented as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 to curb perceived abuses of the bankruptcy system. Here’s a detailed breakdown of how the means test works and its implications for potential filers.
The first step in the means test is to compare the debtor’s average monthly income over the six months prior to filing against the median income for a household of the same size in their state. As of April 1, 2025, the median income for a one-earner household in New Jersey is $84,257 (2 people: $102,903; 3: $131,173; 4: $163,110). Median income data is provided and regularly updated by the U.S. Census Bureau and adjusted by the U.S. Trustee Program.
For those with incomes above the median, the next step involves subtracting specific monthly expenses from your current monthly income to determine your “disposable income.”
The allowable expenses are a mix of actual costs and standardized national or local allowances and include:
After deducting these allowable expenses from your monthly income, the result is your monthly disposable income. If this amount is below a certain threshold, you can file for Chapter 7 bankruptcy. If your disposable income is too high, you may have to file for Chapter 13 bankruptcy instead, which involves setting up a repayment plan rather than liquidating assets to pay off debts.
The means test serves as a gatekeeping mechanism in the Chapter 7 filing process, ensuring that this type of bankruptcy relief is available primarily to those who lack sufficient income to pay off their debts. If you do not pass the means test, it is generally assumed that your income is sufficient to pay off your debts through a Chapter 13 repayment plan. This test is a decisive factor in the type of bankruptcy filing you are eligible for.
Additionally, to file for bankruptcy in New Jersey, you must have completed a credit counseling course from an approved agency within 180 days before your filing date. Aside from the means test, this requirement ensures that all potential filers are fully informed about their financial situation and alternatives to bankruptcy before they proceed with filing.
In cases where it’s unclear whether you qualify for Chapter 7, a bankruptcy attorney can provide guidance on how to effectively manage your deductions. This might include strategies like planning for significant necessary expenses at the right time or keeping precise records of all deductible costs. These tactics can be crucial for those on the borderline of eligibility, aiding them in meeting the requirements for Chapter 7 bankruptcy.
If you’re considering bankruptcy, it’s advisable to consult with a bankruptcy attorney who can provide guidance based on the latest laws and help you understand the implications of the means test.
Contact Straffi & Straffi Attorneys at Law today at (732) 341-3800 for more information.
Filing for Chapter 7 bankruptcy is a significant decision that carries both potential benefits and downsides. The advantages and disadvantages should be carefully considered to determine whether this type of bankruptcy best suits your circumstances.
Deciding to file for Chapter 7 bankruptcy in New Jersey requires careful consideration of both the advantages and the potential drawbacks. It’s often advised to consult with a knowledgeable bankruptcy attorney to thoroughly understand how these factors apply to your specific situation and to help address New Jersey’s bankruptcy laws. To learn more about the advantages and disadvantages of Chapter 7 bankruptcy and how they apply to you, contact Straffi & Straffi Attorneys at Law today for a consultation.
| Advantage | Details / Explanation | Additional Notes |
|---|---|---|
| Debt Discharge | Eliminates many types of unsecured debts like credit cards, medical bills, and personal loans. | Most unsecured debts can be discharged in Chapter 7. |
| Quick Process | The Chapter 7 process typically takes about 3 to 6 months from filing to discharge. | It is faster compared to other bankruptcy types. |
| Asset Exemptions | The filer may choose federal or state exemptions to protect certain property from liquidation. | Exempt property laws vary by state, allowing filers to keep essentials. |
| Automatic Stay | Immediately stops most creditor actions such as wage garnishments, foreclosures, or repossessions. | An automatic stay begins as soon as the case is filed. |
| Credit Rebuilding | After discharge, debtors can begin rebuilding credit more quickly than staying in default. | Bankruptcy remains on credit reports for up to 10 years. |
Filing for Chapter 7 bankruptcy in New Jersey begins with the preparation of a petition and financial statements detailing the debtor’s assets, debts, income, and expenses. This filing is done in the federal bankruptcy court that serves the area where the individual lives or where the business debtor is organized or has its principal place of business or principal assets.
In New Jersey, there are several districts, and knowing where to file is part of the initial steps. The process officially starts once the petition is filed, which triggers an automatic stay that stops most creditors from pursuing debts outside the bankruptcy proceedings.
To file for Chapter 7 bankruptcy in New Jersey, debtors need to compile several key documents:
When a Chapter 7 bankruptcy case is initiated, the court assigns a bankruptcy trustee to handle various responsibilities associated with the process. The trustee’s first task is to assess the assets of the debtor to identify any nonexempt items. These nonexempt assets are then liquidated, with the proceeds used to repay creditors. This part of the trustee’s duty ensures that all available assets are fairly utilized to settle debts.
In addition to managing assets, the trustee also oversees the meeting of creditors. This is a crucial phase where creditors have the opportunity to ask the debtor questions regarding their financial situation and the bankruptcy. The debtor is required to respond to these inquiries under oath, providing clarity and further details about their financial status and the involved assets.
Furthermore, the trustee plays a critical role in monitoring the bankruptcy for any indications of fraud or eligibility issues. It is the trustee’s responsibility to ensure that the bankruptcy proceeds in accordance with the legal requirements, maintaining the integrity of the process. This oversight helps protect the interests of all parties involved and upholds the standards of the bankruptcy system.
The 341 meeting, also known as the meeting of creditors, is an essential step in the bankruptcy process. Scheduled typically about a month after the bankruptcy filing, this meeting requires debtors to answer questions under oath from the bankruptcy trustee and any creditors that choose to attend. The meeting focuses on the debtor’s finances and the accuracy of the information presented in the bankruptcy forms.
Despite potentially being a daunting prospect, the meeting is usually brief, often concluding in just a few minutes. Preparation is key; being familiar with the documents you have filed and understanding the details can greatly ease the process. At the meeting, while creditors have the right to ask questions, in many cases they do not attend, leaving the trustee as the primary questioner. The trustee’s main role during this meeting is to confirm the veracity of the submitted documents and the debtor’s financial disclosures.
For those considering filing for bankruptcy, understanding each part of the process, from preparing the necessary documents to understanding the trustee’s responsibilities and the dynamics of the creditors’ meeting, can help manage expectations and navigate the proceedings with more confidence and preparation. The help of a skilled New Jersey Chapter 7 bankruptcy attorney is also invaluable in tackling the process efficiently and with confidence.
For more information on how we can help, contact us today at (732) 341-3800.
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Daniel Straffi, Jr. is a seasoned resource for New Jersey residents seeking a clear path through Chapter 7 bankruptcy. Mr. Straffi draws on a foundation built at Boston College (B.A., 1998) and Rutgers School of Law–Camden (J.D., 2001). He began his legal career clerking for the Presiding Judge of Family Law in Mercer County, the Hon. Lee Forrester, P.J.F.P., and then served as an associate at Cooper Levenson, where he concentrated on negligence defense.
Since joining his father’s practice in 2004, Mr. Straffi has focused on helping individuals and businesses navigate bankruptcy, including Chapter 7, alongside related issues in divorce and criminal defense. An active member of the New Jersey and Ocean County Bar Associations (Co-Chair, Bankruptcy Panel), he also serves the local courts as a certified mediator and Early Settlement Panelist in Ocean County, bringing a practical, solutions-oriented perspective to every matter.
Exemptions in bankruptcy are critical because they determine what assets you are allowed to keep out of the bankruptcy estate, which is otherwise used to pay creditors. New Jersey offers a choice between using state-specific exemptions or the federal exemption system, but not both. This unique aspect allows debtors to choose the set of exemptions that best protects their assets. It’s important to make this decision wisely, as it directly impacts the outcome of the bankruptcy in terms of what assets you can retain.
Protecting your assets during Chapter 7 bankruptcy involves careful planning and understanding which assets are considered exempt:
New Jersey’s specific exemptions include a variety of asset categories. The state stands out because it does not offer a homestead exemption to protect a filer’s home equity. Instead, filers may opt to use the federal exemptions, which provide a more modest homestead exemption.
New Jersey recognizes tenancy by the entirety (TBE) ownership for married couples. In a single-spouse Chapter 7, a debtor may be able to exempt TBE interests under 11 U.S.C. § 522(b)(3)(B) to the extent that state law protects that interest from process by the debtor’s individual creditors. New Jersey law generally prevents an unsecured creditor of only one spouse from forcing partition of TBE real estate, but courts have noted that a creditor may reach the filing spouse’s survivorship interest, so results can be fact-specific. If both spouses file jointly, TBE protection doesn’t apply. Consult counsel for case-specific analysis.
Regarding exemptions for motor vehicles, New Jersey does not have a specific one for vehicles. Filers have the option to apply a $1,000 exemption for personal property towards their vehicle’s equity or use the federal motor vehicle exemption. It’s important to note that filers must choose either state or federal exemptions, but cannot mix and match between the two systems.
New Jersey offers various other exemptions which include:
One of the most standout differences available for filers opting for the federal exemptions is the availability of the homestead exemption. The Federal Bankruptcy Homestead Exemption allows you to protect up to $31,575 in equity in your principal residence, provided you live in the home. This exemption covers various types of residential properties, including houses, condominiums, and residential trailers. However, it does not cover investment or rental properties.
In addition to the homestead exemption, the federal exemptions also apply to the following:
Choosing between the federal and the state exemptions is a strategic decision that can significantly affect your financial future post-bankruptcy. Consulting a knowledgeable bankruptcy attorney who can provide guidance tailored to your specific situation and assets is crucial to ensure you make the most of the protections available.
Under Chapter 7 bankruptcy, many types of debts can be cleared, and while credit card debt is the most commonly discharged, there are several others included:
In addition, some debts that are generally not dischargeable might be cleared under specific circumstances. For example, student loans can be discharged if it is demonstrated that their repayment causes undue hardship. Claims from auto accidents may also be discharged, provided the incident did not involve drunk driving. Dishonored checks are dischargeable if there was no fraud involved. Lastly, attorney fees can be discharged, although fees related to child support and alimony cannot be. Consult a skilled bankruptcy attorney to learn whether these may apply to your case.
Certain types of debts are not dischargeable under Chapter 7 bankruptcy, meaning they cannot be eliminated through the bankruptcy process. These include:
These debts remain the responsibility of the debtor even after other debts might be discharged.
Certain debts may not be discharged in a bankruptcy case if a creditor challenges the discharge during the proceedings.
Creditors need to demonstrate that these debts fall into specific categories defined by bankruptcy law:
These types of debts require careful consideration during the bankruptcy process, as they are subject to scrutiny and potential objection from creditors.
Choosing an attorney who is well-versed in New Jersey bankruptcy laws offers several advantages:
When selecting a bankruptcy lawyer in New Jersey, it is important to review their track record, reputation, communication skills, and local experience. A thorough evaluation of potential attorneys improves the chance of a successful result in your bankruptcy proceedings.
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For anyone considering a path to financial recovery, becoming familiar with the Chapter 7 bankruptcy process in New Jersey is a vital step. The team at Straffi & Straffi Attorneys at Law brings a wealth of knowledge and practical guidance to help you explore your bankruptcy options thoroughly. With our team’s assistance, you can confidently move forward in your journey to financial well-being.
If you’re ready to take control of your financial situation and seek relief from overwhelming debt, reach out to Straff & Straffi Attorneys at Law. Our experienced team is prepared to provide the support you need to make informed decisions and start afresh.
Contact us today at (732) 341-3800 to learn more about how we can assist you with your Chapter 7 bankruptcy filing. Your path to a brighter financial future begins here.