Chapter 7 Bankruptcy: The “Fresh Start” Solution in New Jersey
If you are drowning in credit card debt, medical bills, or personal loans, Chapter 7 bankruptcy offers a decisive path to financial freedom. It isn’t just a filing; it is a “Fresh Start.”
Chapter 7 bankruptcy is often referred to as “liquidation” bankruptcy, but for the vast majority of our clients in New Jersey, it is simply a total debt reset. It is a federal legal tool designed to wipe out unsecured debts and allow honest, hardworking people to reclaim their financial lives. Unlike debt settlement programs that can drag on for years and leave you with a massive tax bill, Chapter 7 is fast and final. Most clients receive their discharge—the legal order saying they no longer owe the money—in as little as 4 to 6 months.
At Friscia & Associates, we don’t just file paperwork. We strategically navigate the complex bankruptcy code to ensure you keep your assets while eliminating your burdens. Our goal is to ensure that the moment you walk out of the courthouse, you have the breathing room needed to build a stable future. Learn more about the benefits of working with a New Jersey bankruptcy lawyer.
Immediate Relief: The Automatic Stay
The moment we file your petition with the Bankruptcy Court, a powerful federal injunction called the Automatic Stay goes into effect. This is the most immediate benefit of the process. The stay legally prohibits creditors from taking any further action against you. This means:
- Harassment Ends: Collection calls and letters must stop immediately. It is a violation of federal law for a creditor to contact you once they are notified of the stay.
- Garnishments Frozen: If your paycheck is currently being garnished, the stay halts it, putting that money back in your pocket for your living expenses.
- Lawsuits and Judgments Paused: Pending debt collection lawsuits are frozen in their tracks, preventing creditors from obtaining bank levies.
- Utility Protection: It can stop the shut-off of essential services like water, heat, or electricity for a set period.
- Foreclosure Delay: It pauses a Sheriff Sale, giving you critical time to consult with an attorney about saving the home.
Do I Qualify? Understanding the “Means Test”
Chapter 7 is reserved for individuals who do not have the “means” to pay back a significant portion of their debt. To determine eligibility, we perform the Bankruptcy Means Test. This test compares your household income to the median income for a family of your size in New Jersey.
- Below Median Income: If your income is below the NJ median, you typically qualify for Chapter 7 automatically.
- Above Median Income: If you earn more than the median, we perform a complex “disposable income” calculation. We subtract “allowable expenses” like your mortgage, car payments, and taxes. Many high-income earners in NJ still qualify for Chapter 7 once these deductions are applied.
Unsure where you stand? Read more about how the means test works or check who is eligible for Chapter 7 relief.
The Exemption Myth: Will I Lose My Property?
One of the biggest misconceptions about Chapter 7 is that the government will “take your stuff.” In reality, the vast majority of Chapter 7 cases are “No-Asset” cases. This means that through the use of Bankruptcy Exemptions, you can protect almost everything you own.
In New Jersey, we can strategically choose between State or Federal exemptions to protect your clothes, household furniture, retirement accounts (like 401ks and IRAs), and a specific amount of equity in your home and vehicle. At Friscia & Associates, we perform a deep audit of your assets before filing to ensure your property remains protected under the law. Read about the specific protections and benefits of Chapter 7.
What Debts Are Eliminated?
Chapter 7 is exceptionally effective at erasing “unsecured” debt. Once your discharge is granted, you are no longer legally required to pay:
- Credit Card Balances and Store Cards
- Medical Bills (the leading cause of bankruptcy in the United States)
- Personal Loans, Payday Loans, and Signature Loans
- Old Utility Bills and certain Income Tax debts
- Surcharges and certain civil judgments
Note: Certain “priority” debts like child support, alimony, and most student loans are generally not dischargeable.
The 4-Step Fresh Start Process
- Strategy Consultation: We review your debts, run the Means Test, and verify your assets.
- Preparation & Filing: We draft your petition with precision. The moment it is filed, the Automatic Stay begins.
- The 341 Meeting: About 30 days after filing, you attend a brief “Meeting of Creditors” with a Court Trustee to verify your identity.
- The Discharge: Roughly 60 days after your meeting, the judge signs the Discharge Order. Your legal obligation to pay those debts is gone forever.
Life After Chapter 7: Rebuilding Your Credit
Bankruptcy is not a permanent scar; it is a tool for recovery. While a Chapter 7 filing stays on your credit report for a period of time, many of our clients see their credit scores increase within 12 to 24 months. By eliminating high debt-to-income ratios, you create a foundation to start rebuilding credit immediately. Learn more about how to protect and rebuild your credit score.
Take the First Step Toward Freedom
Don’t let the weight of debt steal another night’s sleep. At Friscia & Associates, we provide the compassionate, expert guidance you need to navigate this process with dignity and success.
Get your free bankruptcy evaluation today.
Call us at (973) 500-8024 or (212) 960-8308.
Related Bankruptcy Resources
- Bankruptcy Services Overview
- What Is the Means Test?
- What Is Chapter 13 Bankruptcy?
- Does Filing Bankruptcy Stop Foreclosure?
- How Does Foreclosure & Bankruptcy Impact Credit?
