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If you are overwhelmed by credit card bills, medical debt, or collection calls you can’t keep up with, Chapter 7 bankruptcy may give you a way to eliminate most of that debt and start over. Under federal law, Chapter 7 allows qualifying individuals to discharge unsecured debts like credit cards, medical bills, and personal loans without a repayment plan. Most filers keep their home, car, and retirement savings through available exemptions, and the entire process typically takes three to six months from filing to discharge.
At Straffi & Straffi Attorneys at Law, Toms River bankruptcy attorney Daniel Straffi Jr. has helped individuals and families throughout Ocean County and Central New Jersey file Chapter 7 and regain financial stability. Our New Jersey Chapter 7 bankruptcy lawyers understand how the means test works, which exemptions protect your property, and how to move your case through the U.S. Bankruptcy Court for the District of New Jersey as efficiently as possible.
This guide explains who qualifies for Chapter 7, which debts it eliminates, how to protect your assets, and what the filing process looks like from start to finish. Call Straffi & Straffi Attorneys at Law at (732) 341-3800 for a free consultation.
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Chapter 7 bankruptcy is a federal process that eliminates most unsecured debts through what is known as liquidation. A court-appointed trustee reviews your assets, determines whether any non-exempt property exists, and uses the proceeds to pay creditors. In practice, the vast majority of Chapter 7 cases in New Jersey are “no-asset” cases, meaning the trustee finds nothing to liquidate, and your debts are simply discharged.
The process is governed by Title 11 of the United States Code, and cases are filed in the U.S. Bankruptcy Court for the District of New Jersey. Unlike Chapter 13 bankruptcy, which requires a three-to-five-year repayment plan, Chapter 7 is designed for people whose income is too low to repay their debts. Most cases conclude within three to six months.
Key Takeaway: Chapter 7 bankruptcy eliminates most unsecured debts in three to six months without a repayment plan. Most New Jersey filers keep all their property because their assets fall within available exemptions.
To file Chapter 7, you must pass a two-step income evaluation called the means test. Congress added this test in 2005 through the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) to confirm that Chapter 7 is used by people who truly cannot afford to repay their debts.
The first step compares your average monthly household income over the past six months to the median income for your household size in New Jersey. If your income falls below the median, you qualify without further analysis. If your income exceeds the median, you move to the second step, which subtracts allowable living expenses from your income to calculate your disposable income. If that number is low enough, you may still qualify.
The Internal Revenue Service (IRS) publishes national and local expense standards that determine how much you can deduct for housing, food, transportation, and other necessities. Social Security income is excluded from the means test calculation entirely.
The U.S. Trustee Program updates median income figures periodically. For Chapter 7 cases filed on or after November 1, 2025, the U.S. Trustee Program lists these New Jersey median income figures:
| Household Size | Annual Median Income |
|---|---|
| 1 Person | $84,938 |
| 2 People | $104,136 |
| 3 People | $133,620 |
| 4 People | $163,817 |
For households with more than four members, add $11,100 for each additional person. These figures change periodically, so it is important to confirm the thresholds that apply to your filing date.
Key Takeaway: If your household income is below the New Jersey median for your family size, you likely qualify for Chapter 7. Even if your income exceeds the median, you may still qualify after subtracting allowable expenses. Daniel Straffi Jr. can analyze your income and expenses to determine eligibility. Call (732) 341-3800.
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Chapter 7 eliminates most unsecured debts, which are debts not tied to collateral. Once the court issues your discharge order, creditors can no longer collect on those obligations. However, certain debts survive the bankruptcy process regardless of your financial situation.
Debts typically discharged in Chapter 7 include:
Debts that generally cannot be discharged include:
The full list of exceptions appears in 11 U.S.C. § 523. Because some debts fall into gray areas, it is important to review your specific obligations with an attorney before filing.
Key Takeaway: Chapter 7 eliminates credit card debt, medical bills, personal loans, and most other unsecured obligations. Child support, alimony, most student loans, and recent tax debts typically survive. Contact Daniel Straffi Jr. at Straffi & Straffi Attorneys at Law to review which of your debts qualify for discharge.
One of the biggest concerns people have about filing Chapter 7 is whether they will lose their property. The answer for most filers is no. Federal and state exemption laws protect essential assets, and New Jersey allows you to choose between the state exemption system and the federal exemption system, whichever provides better protection for your situation. You cannot mix and match between the two.
For cases filed on or after April 1, 2025, federal exemptions include a homestead exemption of up to $31,575 in equity and a motor vehicle exemption of up to $5,025 in equity. Most tax-qualified retirement accounts (like 401(k)s and many pensions) are generally protected in bankruptcy. Traditional and Roth IRAs are protected up to $1,711,975 per person in cases filed on or after April 1, 2025 (with certain rollover amounts typically treated differently).
Because most New Jersey Chapter 7 cases are no-asset cases, the trustee determines that no property can be liquidated and the case proceeds directly to discharge. Strategic use of exemptions can protect your property even in cases where equity exists.
Key Takeaway: Most New Jersey Chapter 7 filers keep their home, car, and retirement savings. Federal exemptions protect up to $31,575 in home equity and $5,025 in vehicle equity. Straffi & Straffi Attorneys at Law can evaluate your assets and recommend the exemption system that provides the greatest protection for your situation.
Filing Chapter 7 in New Jersey follows a structured process with clear steps and deadlines. Understanding what happens at each stage can help reduce uncertainty and prepare you for what lies ahead.
Key Takeaway: The Chapter 7 process involves six steps from credit counseling to discharge, and the entire timeline is typically three to six months. Daniel Straffi Jr. handles the petition preparation, court filings, and trustee communications so you can focus on your fresh start.
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Daniel Straffi Jr. was admitted to practice in New Jersey, Pennsylvania, and the U.S. District Court of New Jersey in 2001. He graduated from Boston College in 1998 and Rutgers-Camden School of Law in 2001. After law school, he served as a judicial law clerk in Mercer County, giving him direct experience with how judges evaluate cases and make decisions.
Daniel Straffi Jr. serves as Co-Chair of the Bankruptcy Panel for the Ocean County Bar Association and is a certified mediator and Early Settlement Panelist in Ocean County. He is an active member of both the New Jersey State Bar Association and the Ocean County Bar Association. Clients value his clear explanations of the bankruptcy process and his strategic approach to means test analysis and exemption planning.
The automatic stay is one of the most powerful protections in bankruptcy law. Under 11 U.S.C. § 362, it takes effect the instant your petition is filed with the court and immediately stops most collection activity against you.
The automatic stay prevents creditors from making collection calls or sending demand letters, continuing or filing lawsuits against you, garnishing your wages, levying your bank accounts, repossessing your vehicle, or proceeding with foreclosure on your home. This protection gives you breathing room to work through the bankruptcy process without the pressure of ongoing collection efforts.
There are limitations. The automatic stay does not stop child support or alimony collection, most criminal proceedings, or certain tax actions. Additionally, if you had one bankruptcy case dismissed in the past year, the automatic stay may be limited to 30 days unless the court extends it. If you had two or more cases dismissed in the past year, the stay generally does not go into effect unless the court imposes it.
Choosing between Chapter 7 and Chapter 13 depends on your income, assets, and financial goals. The comparison below highlights the key differences.
| Factor | Chapter 7 | Chapter 13 |
|---|---|---|
| How It Works | Debts discharged without repayment plan | Debts reorganized into 3-to-5-year repayment plan |
| Timeline | 3 to 6 months | 3 to 5 years |
| Income Requirement | Must pass means test (income below NJ median or low disposable income) | Must have regular income to fund repayment plan |
| Property | Non-exempt assets may be liquidated | Keep all property while making plan payments |
| Best For | Low-income filers with mostly unsecured debt | Filers with steady income who want to save a home or car |
| Credit Report Impact | Stays on report for 10 years | Stays on report for 7 years |
If you are behind on mortgage payments and want to save your home, Chapter 13 may be the better option because it allows you to catch up on arrears through the repayment plan. If your primary goal is to eliminate unsecured debt as quickly as possible, Chapter 7 is typically faster and simpler. Daniel Straffi Jr. can review your financial picture and recommend the chapter that best fits your circumstances. Call Straffi & Straffi Attorneys at Law at (732) 341-3800.
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The Chapter 7 filing fee is $338 (a $245 filing fee, $78 administrative fee, and $15 surcharge). In addition, you will pay for the two required educational courses: pre-filing credit counseling and the post-filing debtor education course, which typically cost between $25 and $50 each. Attorney fees vary depending on the complexity of your case.
If your income is below 150% of the federal poverty guidelines, you may qualify for a fee waiver or an installment payment plan for the court filing fee. During your free consultation at Straffi & Straffi Attorneys at Law, Daniel Straffi Jr. will explain all costs upfront so you know what to expect before filing. Call our Toms River office at (732) 341-3800.
A Chapter 7 bankruptcy remains on your credit report for 10 years from the filing date. However, many people considering Chapter 7 already have damaged credit from missed payments, collection accounts, and high debt-to-income ratios. In those situations, filing may actually create a path to faster credit recovery.
After discharge, your debt-to-income ratio drops significantly because most unsecured debt is eliminated. Many filers begin rebuilding credit within one to two years by using a secured credit card responsibly, making all payments on time, and maintaining a realistic budget. The discharge itself does not prevent you from obtaining credit in the future.
Straffi & Straffi Attorneys at Law represents individuals and families filing Chapter 7 bankruptcy from our office at 670 Commons Way in Toms River. We serve clients throughout Ocean County, including Lakewood, Brick Township, Jackson Township, Point Pleasant, Barnegat, Berkeley Township, Manchester Township, Lacey Township, Stafford Township, and Seaside Heights.
We also handle Chapter 7 cases for residents of Monmouth County, Burlington County, and Middlesex County. All cases are filed with the U.S. Bankruptcy Court for the District of New Jersey.
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Managing debt you cannot repay is challenging, and deciding whether to file for bankruptcy is a significant step. You may have concerns about protecting your property, the impact on your credit, or how the process will affect your financial future. Gaining a clear understanding of your options is an important first step toward resolving your debt and moving forward with confidence.
Daniel Straffi Jr. has helped individuals and families throughout Ocean County handle each stage of the Chapter 7 process for over 20 years. At Straffi & Straffi Attorneys at Law, our bankruptcy lawyers handle the means test calculations, petition preparation, court filings, and trustee communications. We are familiar with the procedures at the U.S. Bankruptcy Court for the District of New Jersey and work to move your case through as efficiently as possible.
Call Straffi & Straffi Attorneys at Law at (732) 341-3800 to schedule a free consultation. Our office at 670 Commons Way in Toms River serves clients across Ocean County and Central New Jersey. We will review your financial situation, explain your options, and help you decide whether Chapter 7 is the right path for your fresh start.
Most Chapter 7 cases are completed within three to six months from the date of filing. The 341 meeting of creditors typically occurs 20 to 40 days after filing, and the discharge order usually follows 60 to 90 days after that meeting. Delays can happen if the trustee requests additional documentation or if a creditor raises an objection.
In most cases, no. Federal bankruptcy exemptions protect up to $31,575 in home equity for cases filed on or after April 1, 2025. If your equity falls within this limit, depending on the exemptions you chose, your home is protected. If you are current on mortgage payments and your equity is exempt, you can continue living in your home throughout and after the bankruptcy process.
Yes, if the equity in your vehicle falls within the applicable exemption. The federal motor vehicle exemption protects up to $5,025 in equity. If you owe more on the car than it is worth, you may have no equity at all, which means the car is fully protected. You may also reaffirm the car loan, agreeing to continue payments and keep the vehicle.
New Jersey uses median income figures published by the U.S. Trustee Program to determine eligibility. As of November 2025, the median annual income is $84,938 for a one-person household, $104,136 for two people, $133,620 for three, and $163,817 for four. If your income is below these thresholds, you generally qualify. If it is above, you may still qualify by passing the second part of the means test.
Chapter 7 cannot discharge child support, alimony, most student loans, recent tax debts, court fines and restitution, and debts incurred through fraud. These obligations survive the bankruptcy and remain your responsibility after discharge.
The court filing fee is $338, and the two required educational courses cost between $25 and $50 each. You may be eligible for a waiver, depending on your financial circumstances. Attorney fees vary based on the complexity of your case. Daniel Straffi Jr. offers free consultations to discuss costs and payment options before you commit to filing.
Yes. You can file individually even if you are married, or you and your spouse can file a joint petition together. If you file individually, your spouse’s income may still be considered in the means test calculation if you share household expenses. Daniel Straffi Jr. can advise on the best approach for your household.
Yes. The automatic stay that takes effect when your petition is filed immediately stops wage garnishment. Under 11 U.S.C. § 362, creditors must cease all collection activity, including garnishments, the moment the bankruptcy case is filed.
A Chapter 7 bankruptcy remains on your credit report for 10 years from the filing date. However, many filers see their credit scores begin to improve within one to two years after discharge as they eliminate debt and establish new positive payment history.
Yes, but timing restrictions apply. You must wait at least eight years from the date of your previous Chapter 7 filing before you can receive another Chapter 7 discharge. If you previously received a Chapter 13 discharge, a Chapter 7 discharge is generally barred for six years from the prior case filing date unless you paid 100% of allowed unsecured claims (or at least 70% with good faith and best effort).
The 341 meeting is a brief hearing conducted by the bankruptcy trustee assigned to your case. The trustee asks questions about your income, expenses, assets, and the accuracy of your petition. Creditors are permitted to attend and ask questions, but they rarely do. Your attorney will be present with you throughout the hearing.
You are not legally required to have an attorney, but the means test calculations, exemption analysis, and court filings are complex. Errors can result in case dismissal, loss of property, or challenges from the U.S. Trustee. Daniel Straffi Jr. handles every aspect of the filing process to help you avoid mistakes and protect your interests.
Yes. Having a job does not disqualify you from Chapter 7. Eligibility depends on whether your household income falls below the New Jersey median for your family size or whether your disposable income after allowable expenses is low enough to pass the means test.
A no-asset case is one where the trustee determines that the filer has no non-exempt property that can be liquidated to pay creditors. Most consumer Chapter 7 cases in New Jersey are no-asset cases. In these situations, your debts are discharged without any of your property being sold.
Yes. Medical bills are unsecured debt and are fully dischargeable in Chapter 7 bankruptcy. Once the court issues your discharge order, hospitals, doctors, and medical collection agencies can no longer pursue you for payment on those debts.
Bankruptcy filings are public records, but employers are not typically notified unless your wages are being garnished and the garnishment is stopped by the automatic stay. Federal law prohibits employers from firing you solely because you filed for bankruptcy.