Chapter 7 is the fastest way out of unsecured debt. Most cases finish in four to six months with no repayment plan, and debts like credit card balances and medical bills are wiped out. The trade-off is that a trustee can sell property not covered by an exemption, so Chapter 7 suits renters and filers without much equity. You must pass the means test to qualify.
Chapter 13 is a three- to five-year repayment plan for people with regular income. You keep your property while catching up on missed mortgage or car payments over time. Back taxes can be paid through the plan without new levies. Chapter 13 often fits homeowners who have fallen behind, as well as earners whose income is too high to pass the means test.
Chapter 11 is reorganization for businesses, and for individuals whose debts exceed the Chapter 13 limit. A restaurant keeps its doors open, and a landlord who files can keep collecting rent while a court-approved plan restructures what is owed. Small businesses with up to $7.5 million in qualifying debt can use Subchapter V, a faster and less expensive version of Chapter 11.
The right chapter depends on your income and property, and on whether you have a business to protect. We compare all three during your consultation.
A layoff or cut in hours can turn manageable bills into missed payments within months. The means test averages your income over the six months before you file, so timing is crucial when filing for bankruptcy after a job loss.
An unexpected illness or injury can leave a family with debt that insurance never covered. Medical bills are unsecured, and Chapter 7 can usually wipe them out entirely.
When interest grows faster than you can pay it down, minimum payments stop making progress. Chapter 7 eliminates most credit card balances, while Chapter 13 lets you repay a portion over time if your income is too high for Chapter 7.
Filing stops a foreclosure as soon as the case is filed. Chapter 13 spreads missed payments over three to five years so you can keep the home. Owners of several properties may need Chapter 11 instead.
Once a creditor wins a judgment, it can take part of every paycheck or freeze a bank account. Bankruptcy stops garnishments right away, and in some cases it removes the judgment altogether.
Slow sales, merchant cash advances, or a lease the business can no longer afford can push even established companies to the edge. Chapter 11 lets the business keep operating while it restructures. Owners who close their doors can often discharge personal guarantees in Chapter 7.
Splitting one household into two often leaves both people with more debt than one income can carry. Bankruptcy can clear the debts that remain after the divorce, although support obligations such as alimony and child support cannot be discharged.
1
Your case goes to Trenton, not Newark
Middlesex County cases are assigned to the Trenton vicinage of the U.S. Bankruptcy Court for the District of New Jersey.
2
The median income threshold is higher than many expect
For cases filed on or after April 1, 2026, it is $87,173 for one person and $168,127 for a family of four, plus $11,100 per additional person.
3
Student loans need a separate proceeding
Discharging them requires an adversary proceeding proving undue hardship. Clearing your other debts still frees up money for loan payments.
4
Not all taxes are equal
Some older income taxes can be discharged in Chapter 7. Sales tax and payroll tax withheld from employees cannot, but Chapter 11 can spread them over a plan.
5
Judgment liens can sometimes be removed
Some judgment liens in New Jersey can be wiped off your property entirely.
Decades of Experience
Attorney Daniel Straffi Jr. has practiced bankruptcy law in New Jersey for more than two decades. He has guided individuals and small businesses through every chapter of the Bankruptcy Code, from Chapter 7 liquidations to Chapter 11 reorganizations, and appears regularly before the U.S. Bankruptcy Court for the District of New Jersey.
Track Record Representing a Wide Range of Bankruptcy Filers
We represent wage earners, families, homeowners behind on their mortgages, landlords, and small business owners throughout Middlesex County and across New Jersey. Because the firm also handles family law, we can advise you when a divorce is part of your financial picture.
In-depth Knowledge
We track every change that affects a New Jersey filing, from updated median income figures to the new Subchapter V debt limit, which was restored to $7.5 million in 2026. We also publish guidance on topics such as exemptions and judgment liens. When negotiation or debt restructuring outside court would serve you better than bankruptcy, we will tell you.
Straffi & Straffi’s New Brunswick office is at 317 George Street, Suite 320, in Matrix Centre – Plaza II, a five-story office building in downtown New Brunswick. The building sits on George Street directly across from The Heldrich Hotel & Conference Center.
The office is a short walk from the Middlesex County Courthouse on Paterson Street and close to Robert Wood Johnson University Hospital and Rutgers University. Clients coming from elsewhere in Middlesex County can reach it from Route 18 and Route 1, and the New Jersey Turnpike (Exit 9) is nearby for those traveling from the north or south. Public parking is available in nearby city decks, including the Morris Street and Lower Church Street decks. The New Brunswick NJ Transit train station on the Northeast Corridor Line is about a third of a mile away.
Often, yes. The means test uses your last six months of income, not your old salary.
Only if you prove undue hardship in a separate proceeding within your case.
Yes. Subchapter V is built for small businesses that keep operating while they reorganize.
The business must file its reorganization plan within 90 days of filing, far sooner than in a traditional Chapter 11.
It can, if you file before the landlord has a judgment for possession.
Employers are not notified unless they are a creditor or a garnishment has to stop. A private employer cannot fire you solely for filing.
Not on its own. A state licensing board cannot deny or revoke a license solely because you filed bankruptcy.
Generally, yes. Living or owning property in the United States is enough, and you can file with a Social Security number or an ITIN.
Usually, as long as you keep up with the loan and your equity is protected by an exemption.
The Trenton vicinage of the U.S. Bankruptcy Court for the District of New Jersey.
The sooner you call, the more options you’ll have, especially if a foreclosure or garnishment has already started. Call our New Brunswick office or schedule a free consultation to explore your full range of bankruptcy options.
