Filing Chapter 7 Bankruptcy in New Jersey (2026)
Reviewed by DocDraft Legal Team · New Jersey · Last updated August 18, 2026
Chapter 7 bankruptcy is federal law, but the property you keep depends on which exemption set you elect. New Jersey is a choice state: you may use either the federal 11 U.S.C. 522(d) exemptions or New Jersey's own state exemptions, but not a mix of both. This matters because New Jersey has no state homestead exemption and no motor vehicle exemption, so most New Jersey homeowners with equity choose the federal set, which protects home equity under 522(d)(1) and vehicle equity under 522(d)(2). This page explains the federal versus New Jersey choice, the current federal figures, the means-test median income, and the single federal court where New Jersey debtors file. Chapter 7 discharges most unsecured debt but not most student loans, recent taxes, child support, or spousal support.
Does New Jersey use state or federal bankruptcy exemptions?
New Jersey is a choice state. Under 11 U.S.C. 522(b), New Jersey lets you elect either the federal 522(d) exemptions or New Jersey's state exemptions, but not both. You pick one system in full. Because the New Jersey state set has no homestead and no vehicle exemption, most filers with property choose the federal list.
Can I keep my house if I file Chapter 7 in New Jersey?
Often yes, but only through the federal set. New Jersey has no state homestead exemption, so homeowners with equity elect the federal 522(d)(1) homestead, which protects up to $31,575 of equity for cases filed on or after April 1, 2025. A married couple who both own can double that. Equity above the figure may be reachable.
Can I keep my car if I file Chapter 7 in New Jersey?
Usually yes if you use the federal set and your equity is modest. New Jersey has no state motor vehicle exemption, so filers rely on the federal 522(d)(2) exemption, which protects $5,025 of vehicle equity for cases filed on or after April 1, 2025. The federal wildcard under 522(d)(5) can cover some equity above that figure.
What is the income limit to file Chapter 7 in New Jersey?
For cases filed on or after July 15, 2026, the U.S. Trustee median income figures for New Jersey are $87,173 for one earner, $106,876 for two, $137,136 for three, and $168,127 for four, adding $11,100 per additional person. At or below your household figure, you pass the first part of the means test.
New Jersey's Exemption Choice and Why Most Filers Pick the Federal Set
New Jersey is one of the choice states: under 11 U.S.C. 522(b) a debtor filing here may elect either the federal 522(d) exemptions or New Jersey's own state exemptions, but must use one system in full and cannot combine them. The state-distinct angle is that New Jersey's own exemptions are unusually thin. New Jersey has no state homestead exemption and no motor vehicle exemption at all, and its personal-property exemption under N.J.S.A. 2A:17-19 is only $1,000, though clothing is fully exempt under N.J.S.A. 2A:26-4 and 90 percent of wages are protected under N.J.S.A. 2A:17-56. Because of this, most New Jersey homeowners and car owners with equity choose the federal set instead. The federal figures for cases filed on or after April 1, 2025 are a $31,575 homestead under 522(d)(1), a $5,025 motor vehicle exemption under 522(d)(2), and a wildcard under 522(d)(5) of $1,675 plus up to $15,800 of any unused homestead amount. New Jersey has a single federal district, so all New Jersey debtors file in the U.S. Bankruptcy Court for the District of New Jersey, which sits in Newark, Trenton, and Camden.
Relevant Laws
New Jersey Personal Property Exemption (N.J.S.A. 2A:17-19)
Sets New Jersey's general personal-property exemption at $1,000 in goods, chattels, and stock. New Jersey has no state homestead exemption and no motor vehicle exemption, which is why most New Jersey filers with equity elect the federal set instead of the state list.
Federal Exemption Choice for New Jersey (11 U.S.C. 522(b))
New Jersey has not opted out of the federal exemptions, so under 11 U.S.C. 522(b) a New Jersey debtor may elect either the federal 522(d) set or the New Jersey state exemptions, but not both. This choice is what lets New Jersey homeowners use the federal homestead the state does not provide.
New Jersey Wage and Clothing Exemptions (N.J.S.A. 2A:17-56, 2A:26-4)
N.J.S.A. 2A:17-56 protects 90 percent of a debtor's wages from garnishment, and N.J.S.A. 2A:26-4 fully exempts wearing apparel. These apply if you elect the New Jersey state exemption set. New Jersey provides no state vehicle exemption, so car equity is protected only under the federal set.
Federal Bankruptcy Code Exemptions and Means Test (11 U.S.C. 522, 707)
The federal law behind Chapter 7. Section 522(d) sets the federal exemption figures New Jersey filers may elect, including the 522(d)(1) homestead and 522(d)(2) vehicle exemption, and section 707(b) sets the means test measured against state median income.
Regional Variances
New Jersey Chapter 7: Thin State Set vs the Federal Set Most Filers Choose
Homestead
New Jersey state set: no homestead exemption. Federal set (522(d)(1)): $31,575 of home equity for cases filed on or after April 1, 2025, which a married couple who both own can double. Because the state offers nothing here, most New Jersey homeowners with equity elect the federal set.
Motor vehicle
New Jersey state set: no motor vehicle exemption. Federal set (522(d)(2)): $5,025 of vehicle equity for cases filed on or after April 1, 2025, with the federal wildcard available to cover some additional equity. Car owners with equity generally choose the federal set for this reason.
Wildcard
New Jersey state set: no separate wildcard beyond the $1,000 personal-property exemption. Federal set (522(d)(5)): $1,675 in any property plus up to $15,800 of any unused homestead amount for cases filed on or after April 1, 2025, which is generous for renters and low-equity filers.
Personal property
New Jersey state set (N.J.S.A. 2A:17-19): $1,000 in goods, chattels, and stock, with clothing fully exempt under N.J.S.A. 2A:26-4. Federal set (522(d)(3)): household goods and furnishings up to a per-item and aggregate cap, plus apparel, appliances, books, and animals.
Wages
New Jersey state set (N.J.S.A. 2A:17-56): 90 percent of earnings protected from garnishment, dropping to a lower share only for higher earners. The federal set does not carry a standalone wage exemption, so wage protection is one area where the New Jersey state set can be stronger.
Retirement and tools
Retirement plans are broadly protected either way: ERISA-qualified plans are excluded from the estate under federal law, and 522(d)(12) exempts tax-exempt retirement funds. Under the federal set, 522(d)(6) exempts tools of the trade up to a fixed cap. New Jersey's own set has no comparable tools-of-trade exemption.
Suggested Compliance Checklist
Confirm the current New Jersey means-test median income
Before you file days after startingCheck your household size against the U.S. Trustee New Jersey median income figures in effect on your filing date, since these update periodically. For cases filed on or after July 15, 2026 the figures are $87,173 for one, $106,876 for two, $137,136 for three, and $168,127 for four, adding $11,100 per additional person.
Complete the pre-filing credit counseling course
Within 180 days before filing days after startingTake an approved credit counseling course from a provider authorized for the District of New Jersey and keep the certificate. You must file it with your petition. Skipping this can get your case dismissed before your debts are addressed.
Compare the federal and New Jersey exemption sets and value your assets
Before preparing your schedules days after startingBecause New Jersey has no state homestead or vehicle exemption, value your home, vehicle, and personal property and compare the federal 522(d) set against the New Jersey state set. Most filers with equity choose the federal list. You must elect one system in full.
Prepare and file your petition and schedules
Filing day days after startingFile your petition, schedules, and exemption claims in the U.S. Bankruptcy Court for the District of New Jersey, which sits in Newark, Trenton, and Camden. You file where you have lived for most of the prior 180 days. Filing triggers the automatic stay that pauses collection and garnishment.
Attend the 341 meeting and finish the debtor education course
Before discharge days after startingAttend the 341 meeting of creditors and answer the trustee's questions under oath, then complete the required post-filing financial management course and file the certificate. Both are required before the court will grant your discharge. An attorney can help with contested exemptions.
| Task | Description | Document | Days after starting |
|---|---|---|---|
| Confirm the current New Jersey means-test median income | Check your household size against the U.S. Trustee New Jersey median income figures in effect on your filing date, since these update periodically. For cases filed on or after July 15, 2026 the figures are $87,173 for one, $106,876 for two, $137,136 for three, and $168,127 for four, adding $11,100 per additional person. | - | Before you file |
| Complete the pre-filing credit counseling course | Take an approved credit counseling course from a provider authorized for the District of New Jersey and keep the certificate. You must file it with your petition. Skipping this can get your case dismissed before your debts are addressed. | - | Within 180 days before filing |
| Compare the federal and New Jersey exemption sets and value your assets | Because New Jersey has no state homestead or vehicle exemption, value your home, vehicle, and personal property and compare the federal 522(d) set against the New Jersey state set. Most filers with equity choose the federal list. You must elect one system in full. | - | Before preparing your schedules |
| Prepare and file your petition and schedules | File your petition, schedules, and exemption claims in the U.S. Bankruptcy Court for the District of New Jersey, which sits in Newark, Trenton, and Camden. You file where you have lived for most of the prior 180 days. Filing triggers the automatic stay that pauses collection and garnishment. | - | Filing day |
| Attend the 341 meeting and finish the debtor education course | Attend the 341 meeting of creditors and answer the trustee's questions under oath, then complete the required post-filing financial management course and file the certificate. Both are required before the court will grant your discharge. An attorney can help with contested exemptions. | - | Before discharge |
Frequently Asked Questions
No. New Jersey has no state homestead exemption, which is the key reason most New Jersey homeowners with equity elect the federal exemption set instead. The federal 522(d)(1) homestead protects up to $31,575 of equity for cases filed on or after April 1, 2025. If you choose New Jersey's own exemptions, home equity is not specifically protected.
New Jersey has no state motor vehicle exemption, so filers who want to protect a car choose the federal set. The federal 522(d)(2) exemption protects $5,025 of vehicle equity for cases filed on or after April 1, 2025, and the 522(d)(5) wildcard, $1,675 plus unused homestead, can cover some additional equity. Higher equity may be reachable by the trustee.
It depends on which set you elect. The federal 522(d)(5) wildcard is $1,675 in any property plus up to $15,800 of any unused homestead amount for cases filed on or after April 1, 2025, which is generous for renters. New Jersey's own set offers only the $1,000 personal-property exemption under N.J.S.A. 2A:17-19, another reason most filers pick the federal list.
No. Chapter 7 discharges most unsecured debt like credit cards and medical bills, but it does not erase most student loans, recent income taxes, child support, or spousal support, and it will not discharge debts from fraud. Secured debts like a car loan remain unless you surrender the collateral or reaffirm the loan.
Under New Jersey's state exemptions, N.J.S.A. 2A:17-56 protects 90 percent of your earnings from garnishment, dropping to a lower share only for higher earners. Clothing is fully exempt under N.J.S.A. 2A:26-4. These state protections apply if you elect the New Jersey set; filers who choose the federal set instead rely on the 522(d) list for wages and personal property.
Other New Jersey guides
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