The short version
- Chapter 7 = speed: qualifying debts wiped out in a matter of months.
- Chapter 13 = protection: keep property and catch up on secured debts through a 3–5 year plan.
- Income (the means test) partly decides for you — higher earners may not qualify for Chapter 7.
- Sometimes the chapter you qualify for and the chapter that serves you best are different questions.
People arrive convinced bankruptcy is one thing. It’s at least two — and choosing the right chapter is most of the strategy.
Start with three questions
1. What does your income look like? Chapter 7 has an income screen — the means test — comparing your household income to the New Jersey median for your family size. Below it, Chapter 7 is generally available. Above it, the math gets more involved, and Chapter 13 may be the available route.
2. Are you behind on property you want to keep? Mortgage or car arrears are Chapter 13’s specialty: the plan cures them over time under court protection. Chapter 7 has no mechanism for catching up on secured debt — it’s a clean-slate tool, not a catch-up tool.
3. What are you protecting? If exemptions cover everything you own, Chapter 7’s speed is attractive. If you have significant home equity, savings, or other assets beyond the exemption limits, Chapter 13 protects them — you repay a portion of your debt and keep what’s yours.
The rough profiles
Chapter 7 usually fits: mostly unsecured debt (credit cards, medical bills), income within the limits, little property at risk, and a need to be done fast — typically a few months from filing to discharge.
Chapter 13 usually fits: regular income, behind on a house or car you’re keeping, assets to protect, recent taxes or support arrears that need a structured payoff, or income too high for Chapter 7. It’s a longer road — three to five years — but it’s the chapter that saves things.
Where it gets interesting
Plenty of cases could technically go either way, and the right answer turns on details: a co-signer you want shielded (Chapter 13 protects them; Chapter 7 doesn’t), a tax debt of a certain age, a prior filing, a house with just a little too much equity. This is why the consultation matters — the chapters aren’t better or worse, they’re different tools, and the job is matching the tool to your actual life.
A note on this article: This is general information about New Jersey and federal law, not legal advice about your situation. Every case is different, and the law changes. Before making decisions, talk to an attorney — the consultation is free.
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