Chapter 7 is a “liquidation” bankruptcy meaning it can eliminate most types of unsecured debt. Examples of unsecured debt are credit card bills and medical bills. Individuals, married couples, corporations and partnerships can all file a Chapter 7 bankruptcy, if eligible. There are income limits and a “Means Test” that must be satisfied.
The income limit: the median household income (for your household’s size) in your state. This includes salary, bonuses, overtime, and any additional wages/side work. In New Jersey, the median income amount, as of November 2025, is:
$84,938 for a household of 1;
$104,136 for a household of 2;
$133,620 for a household of 3; and
$163,817 for a household of 4.
For a household of more than 4, the income limit increases by $11,100 for each additional member.
Source: https://www.justice.gov/ust/eo/bapcpa/20251101/bci_data/median_income_table.htm
If your income is at or above these limits, then we would look to your expenses to see if your income could be reduced. This is in order to satisfy the Means Test, where your income and expenses are assessed over the last 6 months, to see if you qualify for Chapter 7 Bankruptcy. That information is given under oath so it is important to be honest with your attorney beforehand.
If you are deemed not to qualify for Chapter 7, then you are still able to convert to a Chapter 13 instead.
Chapter 13 is essentially a court-mandated budgeted repayment plan which the debtor is required to follow in order to repay some or all of their debts, over a 3-5 year period. This repayment plan consolidates the debt, is interest-free, and protects the debtor from contact, collections, or legal action from creditors. The length of the repayment plan will depend on the debtor’s property, income and expenses.
One crucial aspect of a Chapter 13 bankruptcy is that you must have regular income as you will be required to pay both your monthly living expenses and a repayment to the court for your consolidated debts.
A Chapter 13 bankruptcy is very powerful because it provides a mechanism for debtors to prevent foreclosures and sheriff sales and stop repossessions and utility shutoffs while catching up on their secured debt.
View in-depth Chapter 13 FAQs here.
As soon as you come to our office for a free consultation and hire us as your New Jersey bankruptcy lawyer, creditors will no longer be permitted to contact you or your friends and family members. After hiring our firm, you will be able to give our firm’s name and number to any creditors who call. The sooner you come to our office and meet with one of our New Jersey bankruptcy lawyers, the sooner the harassment will stop.
One of the biggest fears people have when first discussing filing a bankruptcy is the possibility of losing their homes. Bankruptcy is meant to help you get a fresh start, not hurt you. There are several different ways to deal with homes in bankruptcy proceedings; listed below are some explanations.
If you are current on your mortgage payments and you file a Chapter 13 bankruptcy, you will not lose your home as long as you can continue to keep current with the mortgage payments. If you file a Chapter 7 bankruptcy and you are current on your mortgage payments, whether or not you will lose your house depends on the amount of equity you have in the property as well as the amount of the homestead exemption to which you are entitled. Homestead exemptions vary from state to state so it is best to contact one of our New Jersey bankruptcy lawyers at 856-751-4224 to discuss your specific situation.
If you are behind on your mortgage payments, typically, the best way to keep your house is to file a Chapter 13 bankruptcy. However, you will need to resume making your regular mortgage payments and repay your missed payments through the Chapter 13 repayment plan. There is a much greater chance you will lose your house if you file a Chapter 7 bankruptcy and are behind on your payments.
Since everyone’s situation is different, we strongly recommend that you contact our office at 856-751-4224 or lperlman@newjerseybankruptcy.com and speak to one of our New Jersey bankruptcy lawyers to discuss your specific set of circumstances.
Depending on whether you file a Chapter 7 or a Chapter 13 bankruptcy, there are ways for you to keep your vehicle. In a Chapter 7 bankruptcy you must be current with your car payments if you want to keep your vehicle. If you are not current when you file, you must be able to catch up on your payments, usually in a short amount of time.
If you are filing a Chapter 13 bankruptcy and you are current with your car payments, you can continue to make the same payment outside of the bankruptcy plan. If you are behind on your car payments, one of our New Jersey bankruptcy lawyers can help you arrange for the payments to be included in your Chapter 13 repayment plan. Either way, you will be able to keep your car.
Student loans are not dischargeable unless the debtor can show that repaying would cause them “undue hardship.” (11 U.S.C. § 523(a)(8)). “Undue hardship” can be shown where the debtor cannot maintain a minimal standard of living if they repay the loans, the debtor’s financial situation is not likely to change, and that the debtor made good faith efforts to repay. Brunner v. New York State Higher Educ. Servs. Corp., 831 F.2d 395 (2d Cir. 1987).
Keep in mind that discharge under Bankruptcy law is an adversarial process – a trial – and is not as simple as just listing your debts and then filing for relief.
Traditionally, the most effective way to get relief from student loans was through a Chapter 13 repayment bankruptcy. Student loans were not discharged in a Chapter 7 bankruptcy. However, in recent years, some Bankruptcy Courts have allowed, in limited circumstances, debtors to discharge their student loan debt in Chapter 7. These circumstances were typically at the end of the student loan repayment period and required that the debtor satisfy the three factors listed above.
If your circumstances do not meet the standards for discharge under Chapter 7 bankruptcy, then our New Jersey bankruptcy lawyers may be able to consolidate your student loan debt into a repayment plan under Chapter 13 bankruptcy. This will ease the burden of possible garnishments as well as harassment from student loan agencies. Call our office today at 856-751-4224 to speak with one of our New Jersey bankruptcy lawyers on easing this burden.
As for income tax debts, they are generally dischargeable but only if you actually filed a timely tax return. 11 U.S.C. § 523(a)(1)(B). You must also satisfy the “3-2-240 rule.”
The “3-2-240 rule” means that your tax return must have been due at least 3 years before filing bankruptcy (meaning that your income tax debt is from at least 3 years ago); your tax return was filed at least 2 years before filing bankruptcy, and your income tax debt must have been assessed by the IRS at least 240 days before you file for bankruptcy. 11 U.S.C. §§ 507(a)(8), 523(a)(1)(B).
If your tax return had been filed late, the tax debt is generally dischargeable only if you file bankruptcy at least 2 years after filing an accurate return. 11 U.S.C. § 523(a)(1)(B). However, tax matters can be complicated, and it is best to contact one of our experienced New Jersey bankruptcy lawyers at 856-751-4224 or lperlman@newjerseybankruptcy.com to fully discuss all your options.
Yes, all of your creditors must be listed in your bankruptcy along with their names and addresses. This is important so that all of your creditors can receive notice of the bankruptcy and, if you are repaying your creditors through a Chapter 13 bankruptcy, can get their share of the money that is being repaid. Not listing all of your creditors is in violation of the law.
If you forget to list a creditor, you should contact your attorney as soon as you realize the creditor has been left out. At that time, you can provide your attorney with the name and address of the creditor and the type and amount of the debt. Omitted creditors can often be added to the bankruptcy, however, your attorney will advise you on how things will proceed. Our experienced New Jersey bankruptcy lawyers can help you handle this issue if it arises.
If all or most of the debts you have are in your name only, your spouse may not have to file. However, your spouse’s income can have an impact on whether you can file a Chapter 7 or a Chapter 13 bankruptcy. Unless your spouse is legally listed as a co-debtor, creditors cannot come after your spouse for any money. Also, if your spouse is not included in the bankruptcy, it should not appear on his/her credit report. Since the laws do vary from state to state, it is best to contact our office and speak with one of our New Jersey bankruptcy lawyers to determine whether your spouse should or should not file.
Are you only able to pay the minimum monthly payments on your credit cards? Do your credit card balances keep growing? Are your wages being garnished or threatening to be garnished? Is your home near foreclosure or is your car about to be repossessed? Do you have medical bills that have put you so deep in debt?
If you have answered “yes” to any of the above questions, a bankruptcy may be the relief you have been looking for. It is best to contact our office at 856-751-4224 or lperlman@newjerseybankruptcy.com and speak to one of our experienced New Jersey bankruptcy lawyers. They can review the specifics of your situation and get you on the road to a fresh start. You can also take a FREE BANKRUPTCY ASSESSMENT and a lawyer from our office will contact you directly about your case.
The only parties that will be notified of your bankruptcy are your creditors, the bankruptcy court and, in some cases, the Internal Revenue Service (IRS). Your employer is not notified of your bankruptcy unless your employer is listed as a creditor in the bankruptcy. Your friends and the general public are not notified.
Even though bankruptcy can be reported on your credit report for up to 10 years, you can begin to rebuild your credit immediately. One of the best places to start rebuilding your credit is your credit report. Your credit report is the place where most lenders look before extending credit.
The Law Offices of Lee M. Perlman is a knowledgeable and experienced law firm in New Jersey dealing with credit reporting issues. We will review your credit report and help remove any inaccuracies that may exist. We can also dispute inaccurate information and, if necessary, file suit in federal court to have the inaccuracy corrected. By making sure that your credit report is as accurate as possible, you are on the way to establishing a new and better credit rating.
Our office can also help put you in touch with legitimate financing companies who can assist you in purchasing a new home or car. We are here to help you rebuild your credit and not fall into the credit trap with unsecured credit cards. One is better off taking a slow and steady approach to opening new lines of credit.
After you file your bankruptcy call our office at 856-751-4224 so we can help you get started rebuilding your credit today. This is just one step to getting a fresh start.
You should bring the last 6 months of your pay stubs or a print-out from your employer of the last 6 months of your pay stubs. If you cannot locate 6 months, bring as many as you can gather.
The last three tax returns, if you can get them together.
Any and all bills that you intend to include in the bankruptcy. This includes but is not limited to, any and all collection agency notices, lawyer’s letters or lawsuits.
Any information on the value of your real estate, if you own real estate and the mortgage payoff information.
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