One question, then what applies to your situation.
This site does not file bankruptcy for you. Bankruptcy is federal,
heard in the United States Bankruptcy Court for the District of New
Jersey, and nothing here prepares a petition. What follows is what the
law says, so you can decide whether this is your road and where to get
real help walking it.
If you were sued and there is a judgment against you, read the
being-sued guide first — there may be a cheaper answer
than bankruptcy, and some of it has deadlines measured in days.
Filing stops most collection, usually immediately
This is the part that matters most to someone whose wages are already
being taken. A bankruptcy petition “operates as a stay, applicable to
all entities” of, among other things, “the enforcement, against the
debtor or against property of the estate, of a judgment obtained before
the commencement of the case” and “any act to collect, assess, or
recover a claim against the debtor that arose before the commencement
of the case” (11 U.S.C. § 362(a)(2), (a)(6)).
The federal judiciary puts it more plainly: as long as the stay is in
effect, creditors generally may not initiate or continue lawsuits, wage
garnishments, “or even telephone calls demanding payments.” It happens
by operation of law — no judge has to order it, and it starts when
the petition is filed.
It is not unlimited, and the limits fall hardest on the people most
likely to be reading this. It does not stop the establishment or
modification of a domestic support order, or collection of domestic
support from property that is not property of the estate
(11 U.S.C. § 362(b)).
If you have filed before, read this twice. Where one earlier case
of yours was pending within the preceding year and was dismissed, the
stay “shall terminate with respect to the debtor on the 30th day
after the filing of the later case” unless the court extends it after
notice and a hearing, on a showing that the later filing “is in good
faith as to the creditors to be stayed” (§ 362(c)(3)). Where two or
more such cases were dismissed within the preceding year, the stay
“shall not go into effect upon the filing of the later case” at all
— a party must ask the court to impose it within 30 days, again on a
good-faith showing (§ 362(c)(4)). Both carry presumptions of bad
faith that a debtor may rebut only by clear and convincing evidence.
Otherwise the stay lasts until the case is closed, dismissed, or a
discharge is granted or denied (§ 362(c)).
What a discharge does not touch
A discharge releases you from personal liability for most debts. It does
not reach several things, and the two that break the most hearts are
first (11 U.S.C. § 523(a)):
- Domestic support obligations — child support and alimony
(§ 523(a)(5)). Bankruptcy does not erase them. Debts to a spouse,
former spouse or child arising from a divorce or separation agreement
are also excepted (§ 523(a)(15)).
- Student loans — government-backed and guaranteed loans,
educational benefit overpayments, scholarships and stipends, and any
“qualified education loan”, “unless excepting such debt from
discharge under this paragraph would impose an undue hardship on the
debtor and the debtor’s dependents” (§ 523(a)(8)). The undue
hardship route exists; it is a separate proceeding and it is hard.
- Many taxes — including any tax for which a required return was
never filed, or was filed late and within two years before the
petition, or where the debtor filed a fraudulent return
(§ 523(a)(1)).
Also outside a discharge: debts for wilful and malicious injury, debts
for death or personal injury caused by driving while intoxicated, and
certain criminal restitution orders. And a discharge does not
extinguish a lien — a secured creditor may still have rights in the
property securing the debt.
The means test, and the line most people never have to cross
A court may dismiss a Chapter 7 case filed by an individual whose debts
are “primarily consumer debts” if it finds that granting relief “would
be an abuse of the provisions of this chapter” (11 U.S.C. § 707(b)(1)).
Abuse is presumed by a formula in § 707(b)(2)(A)(i) that compares
sixty months of your income, net of allowed expenses, against your
unsecured debt.
But there is a safe harbour, and it is the most useful sentence in the
statute for anyone with a low income. No judge, United States trustee,
trustee or other party in interest may file a means-test motion at
all if your current monthly income — combined with your spouse’s —
multiplied by twelve is equal to or less than the median family income
for a New Jersey household of your size (§ 707(b)(7)). At or below the
median, the means test is not a test you have to pass. Nobody is
permitted to bring it.
The current New Jersey median figures are published by the United States
Trustee Program and change; they are not reproduced here for that reason.
Chapter 7 or Chapter 13
Chapter 7 is liquidation: a trustee sells non-exempt property and pays
creditors from the proceeds. Most individual Chapter 7 cases are “no
asset” cases — the trustee finds nothing to sell and files a no-asset
report.
Chapter 13 is a repayment plan, and its particular advantage is that it
can save a home from foreclosure by letting you catch up past-due
payments through the plan. Chapter 7 does not do that. If the pressure
you are under is a mortgage rather than credit cards, that difference is
the whole decision.
Two courses, and the second one is the one people lose over
Before you file: you may not be a debtor at all unless, during the
180-day period ending on the date you file, you received from an
approved nonprofit budget and credit counselling agency an
individual or group briefing — telephone and internet briefings count
(11 U.S.C. § 109(h), § 111(a)). This is an eligibility condition, not
paperwork. Waivers exist for exigent circumstances, for incapacity or
disability or active military duty in a combat zone, and where the U.S.
trustee has determined there are not enough approved agencies.
After you file: you must complete an approved instructional course
in personal financial management. Failing to do so is a listed ground
for the court to deny your discharge (11 U.S.C. § 727) — you can
go through the entire case and lose the thing you filed for. The two
courses are different, from different providers, at different times.
One more bar worth knowing: you cannot file if, in the preceding 180
days, a prior petition was dismissed for your wilful failure to appear
or obey court orders, or you voluntarily dismissed a case after
creditors sought relief from the stay (11 U.S.C. § 109(g)).
If you cannot afford the fees
There is a filing fee, an administrative fee and a trustee surcharge.
They can be paid in up to four instalments, with the last no later
than 120 days after filing — extendable for cause to no later than
180 days (Fed. R. Bankr. P. 1006(b)).
And they can be waived outright: if your income is less than 150% of
the poverty level and you cannot pay even in instalments, the court
may waive the fees entirely (28 U.S.C. § 1930(f)). The bankruptcy
court for New Jersey publishes its Chapter 7 fee waiver procedures.
Current fee amounts are not stated here because the schedule is revised
independently of the pages that quote it — ask the court for the figure
in force on the day you file.
Exemptions: the highest-stakes decision you will make alone
You keep “exempt” property. Which list of exemptions applies to a New
Jersey filer is a question this guide will not answer for you, and
neither will the court: the United States Bankruptcy Court for the
District of New Jersey says on its own exemptions page that “debtors in
some states may use exemptions provided by the bankruptcy code,” and
warns, in the same breath, that “if you claim property exempt under the
wrong law, you may lose that property.”
Here is the stake. New Jersey’s own general exemption reserves personal
property of every kind up to $1,000, plus all wearing apparel
without limit (N.J.S.A. 2A:17-19). That $1,000 has not been raised
since 1973. The federal bankruptcy exemption amounts, by contrast, are
re-indexed to the Consumer Price Index every three years and published
in the Federal Register (11 U.S.C. § 104). One number is frozen in
1973; the other moves with prices.
A choice that large, with that little guidance from the court itself,
is the point at which to stop reading and talk to someone. That is not
a disclaimer — it is the single most consequential thing on this page.
What actually happens, and how long it takes
Between 21 and 40 days after the petition, the trustee holds a
meeting of creditors; you attend and answer questions under oath
(Fed. R. Bankr. P. 2003(a)). The discharge order usually issues
60 to 90 days after the date first set for that meeting
(Fed. R. Bankr. P. 4004(c)).
Excluding cases that are dismissed or converted, individual debtors
receive a discharge in more than 99 percent of Chapter 7 cases.
Federal citations as published by the Office of the Law Revision
Counsel (uscode.house.gov) and the Administrative Office of the U.S.
Courts; N.J.S.A. 2A:17-19 per the 2025 revision. No dollar amounts from
11 U.S.C. 522(d) or 707(b) appear above: they are re-indexed every three
years under 11 U.S.C. 104, so a figure copied from the statute is a base
amount, not a current one.
This is not legal advice and it is not a filing tool. Your answers are
encrypted while you work and erased after 30 minutes of inactivity.