Filing a Chapter 7 bankruptcy generally makes sense for anyone who cannot keep up with their bills. There is no shame in seeking a fresh start due to loss of employment, medical bills or a divorce. As an experienced New Jersey bankruptcy attorney, when you call me, I will first be concerned about your qualifications for filing.
Q. Is there any time limit on filing a Chapter 7 bankruptcy if I filed a Chapter 7 or Chapter 13 case before?
A. Yes, you must wait 8 years from the filing of your first Chapter 7, to file a new Chapter 7. If you obtained a Chapter 13 discharge, you must wait 6 years to file Chapter 7, unless you paid all of your creditors in full in the Chapter 13, in which case there is no waiting period.
Q. Is there an income limit on filing Chapter 7?
A. Yes. For example, for a New Jersey resident living alone, the income limit for filing Chapter 7 in 2026 is $84,257. For a two person household, the limit is $102,903. If you exceed the income limit, you always have the option of filing Chapter 13 for debt relief.
Q. Can I discharge Federal income taxes in a Chapter 7 case?
A. Yes, if the taxes accrued more than three years from the filing of your Chapter 7 case.
Q. Will I be allowed to keep my car if I file?
A. If you have a car loan, then you must reaffirm that debt with your auto lender during the bankruptcy case if you want to keep it. You also have a limited exemption for your equity in any car, so if it has a modest value, you will be able to keep it.
Q. What if I own a home?
A. The answer is that it depends, on the amount of equity in your home. The goal in your Chapter 7 case is to keep your assets and discharge your debts. However, the court would not permit you to keep your home with no mortgage on it and discharge your debts, but rather would order the sale of the home and use the proceeds to pay your creditors. That is something that no Chapter 7 debtor wants.
Alternatively, if you owe more on the home than it is worth, the court would have no interest in selling the house because nothing would be gained by that.
If you have some equity, then from the established home value, is deducted 10% as a sale allowance, and then the payoff amount of your mortgage is subtracted. If the resulting amount is less than your homestead exemption (currently $31,575 for a single filer), then you can keep your home and obtain a Chapter 7 discharge. If the resulting amount is more than your homestead exemption, then you are at risk of a forced sale of your home and should not file Chapter 7.
Hopefully this brief review of some common questions about Chapter 7 bankruptcy should make your options a little clearer. We are experienced New Jersey bankruptcy attorneys and are always here for an initial free consultation. Call us today.
