Bankruptcy is a system of federal law, so the process to file for Chapter 7 bankruptcy or to file for Chapter 13 bankruptcy is nearly identical in every state, including New Jersey. However, state law plays an important role, particularly in setting property exemptions, which determine what property you get to keep (if you file for Chapter 7) and how much you have to repay your creditors (if you file for Chapter 13). There are also important resources available to you by state.
Before you file for Chapter 7 or Chapter 13 bankruptcy in New Jersey, you will have to complete mandatory credit counseling with an agency that’s been approved by the United States Trustee’s Office. Here’s a list of agencies in New Jersey that have been approved to provide this counseling.
Where to File
In New Jersey, the bankruptcy courts are in Trenton, Newark, and Camden. At the court’s website, you can find information on forms, local rules, and more.
Like every other state, New Jersey has its own set of property exemptions. (To learn more about how property exemptions work generally and which exemptions you may use, see Bankruptcy Exemptions: What Do I Keep When I File for Bankruptcy?)
In New Jersey, you may use either the New Jersey state exemptions, or the federal bankruptcy exemptions.
New Jersey is one of the few states that does not have a homestead exemption. The list of New Jersey's personal property exemptions is also somewhat short, and includes burial plots; clothing; and furniture and household goods to $1,500. In New Jersey you can exempt certain wages, some public benefits, and certain pensions, among other things. Here’s a more comprehensive list of New Jersey exemptions.
The Means Test
When you file for bankruptcy, you must compare your income to the median income for a household of your size in New Jersey. If your income is less than the median, you will be eligible to file for Chapter 7 and, if you choose to file for Chapter 13, you can use a three-year repayment plan (rather than five years).
Currently, the median New Jersey income for a one-person household is just under $60,500; these figures change periodically. You can find the most recent amounts on the website of the U.S. Trustee at www.justice.gov/ust. Click on “Bankruptcy Reform,” and then “Means Testing Information.” Or go directly to the Census Bureau table here.
After you file for bankruptcy but before you receive your discharge, you must take a debtor education course. Like the mandatory credit counseling you must take before filing your forms, you must receive debtor education from an agency approved by the U.S. Trustee’s Office. Here a list of agencies approved to provide this course in New Jersey.
Getting Help From a Bankruptcy Lawyer
If you're considering bankruptcy, you may want to talk to an experienced New Jersey bankruptcy lawyer.