Chapter 7 is the fastest path to debt relief. Most unsecured debts are eliminated in 3-4 months. Here is what Newark residents need to know.
Chapter 7, sometimes called "liquidation bankruptcy" or a "fresh start," eliminates most unsecured debts. A court-appointed trustee reviews your assets. If you have non-exempt property, the trustee may sell it to pay creditors -- but most Chapter 7 cases are "no-asset" cases where the filer keeps everything.
In Newark, most Chapter 7 filers keep all their property because it falls within New Jersey exemption limits.
To file Chapter 7, you must pass the means test. This compares your household income to the state median:
For a single filer in New Jersey, the current median is approximately $68,000/year. These figures increase with household size.
New Jersey has NO state bankruptcy exemptions. Filers must use the federal exemption system. This is unusual -- most states have their own exemptions.
| Property | New Jersey Exemption |
|---|---|
| Homestead | $27,900 (federal) |
| Vehicle | $4,450 (federal) |
| Personal property | $1,475 per item (federal) |
| Retirement (IRA/401k) | Fully exempt |
| Public benefits | Fully exempt |
Chapter 7 discharges most unsecured debts including credit cards, medical bills, personal loans, and old utility bills. It does not discharge student loans, recent taxes, child support, or debts from fraud. See section 523(a) for the full list.
The means test compares your household income to the New Jersey median. If below, you qualify automatically. If above, a detailed calculation determines eligibility.
From filing to discharge, typically 3-4 months. The 341 meeting occurs about 30 days after filing, and the discharge comes about 60 days after that.
New Jersey exemptions protect homestead equity up to $27,900 (federal), vehicle up to $4,450 (federal), and personal property up to $1,475 per item (federal). Full exemption details.
Use the free 1328(f) screener to check whether a prior discharge affects your eligibility.
Free Discharge Screener