Several factors can prevent you from filing for bankruptcy or receiving a discharge of your debts in New Jersey. These include failing the means test, committing fraud during the filing process, having a recently dismissed case, and receiving a prior discharge within restricted time periods. However, being disqualified from one chapter does not always mean you have no options. Many people who cannot file under Chapter 7 may still qualify for Chapter 13, and vice versa.
At Straffi & Straffi Attorneys at Law, New Jersey bankruptcy attorney Daniel Straffi, Jr. helps individuals and families throughout Ocean County and Toms River understand whether they are eligible for bankruptcy protection. Filing without knowing the rules can lead to case dismissal, wasted filing fees, and delays that leave you exposed to creditor actions.
This guide explains the income requirements for Chapter 7 and Chapter 13, the role of asset exemptions, what types of fraud lead to disqualification, how prior filings affect your eligibility, and which debts cannot be discharged even in a successful case. You will also learn about alternatives to bankruptcy and common mistakes that can jeopardize your filing. Call Straffi & Straffi Attorneys at Law at (732) 341-3800 to speak with Daniel Straffi, Jr. about your situation.
What Are the Income Requirements for Filing Bankruptcy in New Jersey?
Eligibility for Chapter 7 bankruptcy depends largely on whether your household income falls below the state median for your family size. The United States Bankruptcy Code requires all individual filers to complete the means test, which compares your average monthly income over the six months before filing to published thresholds. If your income is below the median, you generally qualify without further analysis.
The U.S. Department of Justice publishes updated median income figures for New Jersey. For cases filed on or after April 1, 2026, the New Jersey median family income figures are $87,173 for 1 person, $106,876 for 2 people, $137,136 for 3 people, and $168,127 for 4 people. For households larger than four, add $11,100 for each additional person.
| Household Size | Annual Median Income (cases filed on or after April 1, 2026) |
|---|---|
| 1 Person | $87,173 |
| 2 People | $106,876 |
| 3 People | $137,136 |
| 4 People | $168,127 |
| Each additional person above 4 | Add $11,100 |
If your income exceeds the median for your household size, you must complete the second part of the means test. This calculation subtracts allowable expenses from your monthly income using standards published by the Internal Revenue Service (IRS). If your remaining disposable income is too high, the court may presume that your filing is an abuse under 11 U.S.C. § 707(b), and your Chapter 7 case may be dismissed or converted to Chapter 13.
Chapter 13 bankruptcy does not use the means test for eligibility. Instead, it requires that you have a regular source of income and that your debts fall within specific limits. This makes Chapter 13 an option for higher earners who want to reorganize their debts into a structured repayment plan lasting three to five years.
Does High Income Automatically Disqualify You from Bankruptcy?
Earning above the New Jersey median does not automatically bar you from Chapter 7. The means test has a second step that accounts for your actual expenses. Mortgage payments, car loans, child support obligations, taxes, and health insurance premiums all reduce your disposable income in the calculation.
For example, a household earning $180,000 per year might still pass the means test if they carry a large mortgage, significant medical expenses, and mandatory payroll deductions. The calculation is specific to each filer’s circumstances, which is why two families with identical incomes can have different results.
What if You Cannot Pass the Means Test?
If the second step of the means test still shows too much disposable income, Chapter 13 remains available. Under Chapter 13, you propose a repayment plan to pay creditors a portion of your debts over three to five years. At the end of the plan, remaining eligible unsecured debts may be discharged.
Chapter 13 has its own eligibility limits. As of cases filed on or after April 1, 2025 until March 2028, an individual generally qualifies for Chapter 13 if their unsecured debts are less than $526,700 and their secured debts are less than $1,580,125. These dollar amounts are adjusted periodically, so it is still important to confirm the current figures before filing.
Bankruptcy Attorney in Toms River – Straffi & Straffi Attorneys at Law
Daniel Straffi, Jr., Esq.
Daniel Straffi, Jr. is a New Jersey bankruptcy attorney admitted to practice in New Jersey, Pennsylvania, and the United States District Court for the District of New Jersey since 2001. A graduate of Boston College (1998) and Rutgers-Camden School of Law (2001), he began his career as a judicial law clerk for the Honorable Lee Forrester, Presiding Judge of the Family Part in Mercer County.
He later practiced negligence defense at Cooper Levenson before dedicating his career to bankruptcy and debt relief. Mr. Straffi serves as Co-Chair of the Bankruptcy Panel for the New Jersey State Bar Association and the Ocean County Bar Association. He is also a certified mediator and early settlement panelist in Ocean County.
What Factors Disqualify You from Filing Bankruptcy in New Jersey?
Beyond income and asset considerations, several specific factors can prevent you from filing or receiving a discharge. Knowing these disqualifications before you begin the process can save time, money, and legal complications.
Can a Recently Dismissed Case Prevent You from Filing Again?
If a prior bankruptcy case was dismissed within the past 180 days, you may be barred from filing again during that period. Under 11 U.S.C. § 109(g), this restriction applies when the dismissal resulted from the debtor’s failure to comply with court orders, failure to appear at required hearings, or voluntary dismissal after a creditor sought relief from the automatic stay.
This waiting period exists to prevent abuse of the automatic stay, which halts all collection activity the moment a case is filed. Without this restriction, a debtor could file, gain temporary protection, allow the case to be dismissed, and then immediately refile to restart the stay.
How Does Fraud Affect Your Bankruptcy Eligibility?
Fraud is one of the most serious disqualifying factors. Under 11 U.S.C. § 727(a)(2), the court may deny your discharge entirely if it determines you attempted to defraud creditors or the court. Common forms of bankruptcy fraud include:
- Transferring or selling assets for less than fair market value before filing
- Concealing property or income from the bankruptcy trustee
- Providing false or misleading information on bankruptcy schedules and petitions
- Running up large debts on luxury goods or cash advances shortly before filing, with no intent to repay
The bankruptcy trustee is specifically tasked with investigating these issues. Creditors may also file adversary proceedings to challenge your right to a discharge. If fraud is proven, consequences go beyond case dismissal and can include criminal penalties under 18 U.S.C. § 152, which covers bankruptcy fraud.
Do Previous Discharges Create Waiting Periods?
Yes. Federal law imposes strict time limits between bankruptcy discharges:
- Chapter 7 after Chapter 7: You must wait eight years from the filing date of your previous Chapter 7 case before receiving another Chapter 7 discharge.
- Chapter 7 after Chapter 13: You must wait six years from the filing date of your previous Chapter 13 case, unless you paid 100% of unsecured claims or at least 70% under a good-faith plan.
- Chapter 13 after Chapter 7: You must wait four years from the filing date of the prior Chapter 7 case.
- Chapter 13 after Chapter 13: You must wait two years from the filing date of the prior Chapter 13 case.
These restrictions apply to the discharge, not to the filing itself. In some cases, you can file a new case before the waiting period expires, but you will not receive a discharge of your debts at the conclusion.
Straffi & Straffi Attorneys at Law represents clients before the United States Bankruptcy Court for the District of New Jersey, which handles local filings through the Trenton vicinage at the Clarkson S. Fisher U.S. Courthouse. Call (732) 341-3800 to review your eligibility.
What Debts Cannot Be Discharged in Bankruptcy?
Even if you qualify for bankruptcy and receive a discharge, certain categories of debt survive the process. Knowing which debts are non-dischargeable helps you set realistic expectations about the relief bankruptcy can provide.
Are Alimony and Child Support Dischargeable?
No. Domestic Support Obligations (DSOs), which include alimony, child support, and related arrears, are automatically non-dischargeable under both Chapter 7 and Chapter 13. Filing for bankruptcy does not terminate your obligation to make these payments, and any unpaid amounts continue to accrue.
However, Chapter 13 can sometimes help debtors address DSO arrears through a repayment plan over three to five years. Even so, bankruptcy does not eliminate domestic support obligations, and the automatic stay has important exceptions for support-related enforcement. Bankruptcy may also free up income by discharging other eligible debts, which can make it easier to stay current on ongoing support obligations.
Can You Discharge Tax Debts in Bankruptcy?
Tax debts are generally non-dischargeable, but there are exceptions for older personal income taxes. To qualify for discharge, the tax debt must meet all of the following conditions: the tax return was due at least three years before the bankruptcy filing, the return was actually filed at least two years before filing, the tax was assessed at least 240 days before filing, and there was no willful attempt to evade the tax.
If your tax debt does not meet these criteria, Chapter 13 can still provide relief by allowing you to repay the debt over the plan period while stopping IRS levies and halting the accumulation of additional penalties.
Is Student Loan Debt Dischargeable?
Student loan debt is presumed non-dischargeable unless you can demonstrate undue hardship to the court. This standard requires showing that you cannot maintain a minimal standard of living while repaying the loans, that your financial situation is unlikely to improve, and that you have made good-faith efforts to repay. Courts have historically applied this test strictly, though recent developments have slightly expanded the circumstances under which discharge may be granted.
Key Takeaway: Alimony, child support, most tax debts, and student loans generally survive bankruptcy. However, filing can still help by eliminating other debts and creating structured repayment plans for non-dischargeable obligations.
Daniel Straffi, Jr. can evaluate your debts and explain which ones may be discharged in your case. Contact Straffi & Straffi Attorneys at Law at (732) 341-3800.
What Are the Alternatives to Filing Bankruptcy?
Bankruptcy is not the only path to managing overwhelming debt. Depending on your circumstances, one of the following alternatives may achieve similar results without the long-term credit impact of a bankruptcy filing.
Debt Repayment Plans
A debt management plan (DMP) allows you to consolidate multiple debts into a single monthly payment, often with reduced interest rates negotiated by a credit counseling agency. These plans typically run three to five years and can simplify your finances without requiring a court filing. The New Jersey Division of Consumer Affairs maintains information on licensed credit counseling agencies in the state.
Debt Settlement Negotiations
In a debt settlement, you or your representative negotiates directly with creditors to accept a lump sum payment that is less than the full balance owed. Creditors may agree to settle if they believe they will recover more through negotiation than through bankruptcy proceedings. This approach carries risks, including potential tax liability on forgiven debt and damage to your credit score during the negotiation period.
Credit Counseling and Financial Education
New Jersey requires completion of an approved credit counseling course within 180 days before filing for bankruptcy, but these programs can be valuable even if you decide not to file. A certified counselor can help you create a budget, identify areas where you can reduce expenses, and develop a plan to address your debts without court intervention.
Key Takeaway: Debt repayment plans, settlement negotiations, and credit counseling may resolve your financial situation without bankruptcy. These alternatives work best when your debt is manageable with restructured terms. If your debts are too large or your income too limited for these options, bankruptcy may still be the most effective path.
Straffi & Straffi Attorneys at Law evaluates both bankruptcy and non-bankruptcy solutions for clients throughout New Jersey. Call (732) 341-3800 to discuss your options.
What Mistakes Can Get Your Bankruptcy Case Dismissed?
Filing errors and procedural missteps can result in dismissal, delayed discharge, or even allegations of fraud. Knowing the most common mistakes helps you avoid them.
Failing to Complete Required Credit Counseling
Individual debtors generally must complete an approved credit-counseling course within 180 days before filing. After filing, a separate debtor-education course is generally required to receive a discharge. The United States Trustee Program maintains lists of approved credit-counseling agencies and debtor-education providers. If the pre-filing credit-counseling requirement is not met, the case could be dismissed; if the post-filing debtor-education requirement is not met, the debtor may be denied a discharge.
Failing to Disclose Assets or Income
Every bankruptcy petition requires full disclosure of all assets, income sources, and financial transactions. Omitting a bank account, a side income stream, or a recent property transfer can lead to the denial of your discharge. The bankruptcy trustee has access to tax returns, bank records, and public property records, making concealment difficult and risky.
Making Preferential Transfers Before Filing
Paying one creditor ahead of others in the 90 days before filing, or paying a family member or business partner within one year before filing, may be considered a preferential transfer. The trustee can reverse these payments and recover the funds for distribution to all creditors. This does not necessarily disqualify you, but it complicates your case and may delay the process.
Running Up New Debt Before Filing
Charging luxury goods totaling more than $900 to a single creditor within 90 days of filing, or taking cash advances totaling more than $1,250 within 70 days of filing, creates a presumption that those debts were incurred fraudulently. The creditor can challenge the dischargeability of those specific debts, and a pattern of pre-filing spending may lead the court to question the good faith of your entire petition.
Key Takeaway: Complete all required counseling courses, disclose every asset and income source, avoid paying certain creditors ahead of others before filing, and do not incur new debt you cannot repay. Each of these mistakes can delay or destroy your chance at a fresh start.
Get Legal Assistance from a New Jersey Bankruptcy Attorney
At Straffi & Straffi Attorneys at Law, the team handles Chapter 7 and Chapter 13 filings, means test analysis, and exemption planning. Local residents file through the Trenton vicinage of the United States Bankruptcy Court for the District of New Jersey.
Call Straffi & Straffi Attorneys at Law at (732) 341-3800 to schedule a consultation. Our office is located at 670 Commons Way, Toms River, NJ 08755, serving families throughout Ocean County, Monmouth County, and southern and central New Jersey. Take the first step toward understanding your options and building a path to financial stability.
