The New Jersey Answer in One Paragraph
New Jersey filers choose between Chapter 7 (liquidation, 3-4 months, strong discharge rate) and Chapter 13 (3-5 year repayment plan, better for saving a home from foreclosure or for filers above the means test). Three New Jersey-specific inputs drive the choice: (1) the New Jersey means test median of $93,051 for a 1-person household, (2) the New Jersey homestead exemption of No state homestead (federal available), and (3) the local filing mix and outcome data below. Everything else on this page is elaboration on those three factors.
Quick Side-by-Side
Chapter 7 in New Jersey
Chapter 13 in New Jersey
New Jersey Means Test Thresholds (April 2026)
New Jersey's single-person median of $93,051 is well above the national average. A larger share of would-be filers here land above the means test threshold on Part 1, which pushes them into Part 2 expense calculations or away from Chapter 7 entirely.
| Household Size | New Jersey Median Income |
|---|---|
| 1-person household | $93,100 |
| 2-person household | $121,000 |
| 3-person household | $141,400 |
| 4-person household | $164,700 |
| 5-person household | $178,700 |
| 6-person household | $192,600 |
For household sizes above 6, add $11,100 per additional member. Full details at the New Jersey means test calculator. For a general discussion, see our means test overview.
New Jersey Homestead Exemption and the Chapter Choice
New Jersey does not have a state homestead exemption, but filers can use the federal homestead exemption under 11 U.S.C. Section 522(d)(1) (approximately $31,575 per filer as of 2026, doubled for joint filers). For homeowners with equity above that amount, Chapter 13 is often the only option to stop foreclosure and keep the home.
New Jersey lets filers choose between state exemptions and the federal bankruptcy exemption scheme (11 U.S.C. Section 522(d)). Review the full exemption list at bankruptcyexemptionsbystate.com/new-jersey before assuming any specific asset is safe.
Homestead amount (New Jersey): No state homestead (federal available). Statute: N.J.S.A. (see 522(d)).
New Jersey's Chapter 7 vs Chapter 13 Filing Mix
Warning sign: New Jersey's Ch. 7/13 mix is unusual. Of 1,580 consumer cases in the federal database, 66.7% are Chapter 13 and only 33.3% are Chapter 7. That is the inverse of the national average (where Chapter 7 accounts for roughly two-thirds of filings). This pattern is driven in part by local practitioner habit, trustee posture, and court-level plan-confirmation dynamics. If a New Jersey attorney steers you toward Chapter 13, ask explicitly why Chapter 7 is not the right fit for your facts -- not for the local default.
Why does filing mix matter? Attorney fee structures often favor Chapter 13 (paid through the plan rather than up-front), which can produce local-market bias toward Chapter 13 that is not driven by individual debtor facts. FJC data lets you see whether New Jersey's mix matches the economics of the typical filer's situation.
New Jersey Federal Court Data
Numbers below come from the Federal Judicial Center Integrated Database, covering 1,580 consumer bankruptcy cases filed in New Jersey's federal bankruptcy courts.
| Chapter | Cases Filed | Discharge Rate (resolved) |
|---|---|---|
| Chapter 7 | 526 | 97.3% |
| Chapter 13 | 1,054 | 31.0% |
Outcomes in New Jersey differ sharply between the chapters. Of resolved Chapter 7 cases in the FJC database, 97.3% end in discharge. Of resolved Chapter 13 cases, only 31.0% end in discharge; the remaining 69.0% are dismissed before the plan completes. If you are physically able to file either chapter, this gap is a reason to think hard before committing to a 3-5 year Chapter 13 plan in New Jersey.
Which Chapter Fits Which New Jersey Filer?
- If your income is below the New Jersey median ($93,051, 1-person) and you own little non-exempt property: Chapter 7 is almost certainly the right choice. Fast, cheap, and the highest discharge rate in consumer bankruptcy.
- If you are behind on your mortgage or car loan and want to keep the collateral: Chapter 13 lets you cure arrears over 36 to 60 months while the automatic stay blocks foreclosure and repossession.
- If a New Jersey attorney steers you to Chapter 13 despite passing the means test: get a specific, written reason tied to your assets, income, or debts. Local default in New Jersey is Chapter 13-heavy; your facts may still fit Chapter 7.
- If you have high home equity and New Jersey caps the homestead exemption: run the numbers on Chapter 13 cramdown, lien stripping (for wholly underwater junior liens), and the federal BAPCPA homestead cap before assuming Chapter 7 is safe.
- If you have filed before within the lookback windows: use the 1328(f) discharge screener first -- a prior Chapter 7 discharge bars another Chapter 7 for 8 years, and a prior Chapter 13 discharge bars another Chapter 13 for 2 years.
Rule of thumb for New Jersey: if you qualify for Chapter 7 on the means test AND your home equity is within the No state homestead (federal available) homestead, Chapter 7 is almost always the right choice. Chapter 13 is the right answer when specific facts (arrears, non-exempt equity, prior Chapter 7 within 8 years) rule Chapter 7 out.
Frequently Asked Questions
Is Chapter 7 or Chapter 13 better in New Jersey?
For most New Jersey filers who pass the means test, Chapter 7 is faster, cheaper, and succeeds more often. Chapter 13 is the right choice if you need to save a home from foreclosure, cure arrears, catch up on priority taxes, or cannot qualify for Chapter 7.
What is the Chapter 7 income limit in New Jersey?
There is no hard dollar limit. The means test compares your 6-month average income (annualized) to the New Jersey median for your household size. One person: $93,051. Four person: $164,700. Above-median filers can still qualify by running Part 2 expense deductions.
Can I use federal bankruptcy exemptions in New Jersey?
Yes. New Jersey is an opt-in state -- filers may choose federal exemptions under 11 U.S.C. Section 522(d) instead of state exemptions. Compare both schedules before filing; federal can offer a larger wildcard while state may offer a larger homestead.
How much home equity is protected in New Jersey bankruptcy?
New Jersey's homestead exemption protects No state homestead (federal available) under N.J.S.A. (see 522(d)). Federal BAPCPA limits (11 U.S.C. Section 522(p)) can cap this at approximately $214,000 for a residence acquired within 1,215 days of filing.
How long does bankruptcy take in New Jersey?
Chapter 7 takes 3 to 4 months from filing to discharge in New Jersey federal bankruptcy court. Chapter 13 takes 3 years (below-median) or 5 years (above-median) of monthly plan payments before discharge.
Can I switch from Chapter 13 to Chapter 7 in New Jersey?
Yes. Under 11 U.S.C. Section 1307(a), a Chapter 13 debtor in New Jersey generally has the right to convert to Chapter 7 at any time, as long as the case was not previously converted from Chapter 7. You must still pass the means test at the time of conversion.
Related New Jersey Resources
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Last updated: 2026-04-18. Not legal advice. Statutory homestead and median-income figures are reproduced from public sources and may lag statutory amendments -- verify against current state statute before relying.
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