What is a Chapter 7 case?

A Chapter 7 bankruptcy, often referred to as "liquidation", contemplates an orderly, court-supervised procedure by which a trustee takes over the assets of the debtor's estate, reduces them to cash, and makes distributions to creditors, subject to the debtor's right to retain certain exempt property and the rights of secured creditors.

In most Chapter 7 cases, if the debtor is an individual, he or she receives a discharge that releases him or her from personal liability for certain dischargeable debts.  The debtor normally receives a discharge just a few months after the petition is filed.

Filing a Chapter 7 petition "automatically stays" (stops) most collection actions against debtors or their property.  As long as the automatic stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or demand payment.  However, there are a number of exceptions to the automatic stay  (a criminal proceeding, for example), and in some instances the automatic stay may only be in place for a short period of time.

For more information about Chapter 7, refer to the Bankruptcy Basics Guide.

What does the debtor need to do before filing a Chapter 7 case?

Before filing a Chapter 7 case, an individual debtor must obtain credit counseling from an approved credit counseling agency.  The debtor must receive credit counseling during the 180 days before the bankruptcy petition is filed.  If the debtor is married and filing a joint petition, both debtors must obtain credit counseling.  Credit counseling may be conducted over the phone, over the internet or in person.  When the credit counseling is completed, the credit counseling agency issues a credit counseling certificate.

In addition to the credit counseling certificate, the debtor(s) must also complete Exhibit D - Individual Debtor’s Statement of Compliance with Credit Counseling Requirement.  Place a check in the appropriate box indicating one of the following:

• Box 1 states that the debtor(s) received credit counseling within the180 days before the filing of the petition and they have the certificate from the agency.
• Box 2 states that the debtor(s) received credit counseling within the 180 days before the filing of the petition, but they do not have the certificate from agency.

Limited exceptions to the credit counseling requirement are addressed in Box 3 and Box 4:

• Box 3 states that the debtor(s) requested counseling from an approved agency, but were unable to obtain services within 7 days of the request and they are filing for exigent circumstances.  This means that unusual things happened that prevented them from getting the credit counseling before they filed the petition.  The circumstances must be described in detail.
• Box 4 states that the debtor(s) are not required to receive credit counseling because of incapacity or disability (defined in 11 U.S.C. §109(h)(4)), or active military duty in a military combat zone.

Click here to locate an approved Credit Counseling Agency.

Click here for more information about Credit Counseling

Note: Credit Counseling is not the same as the Personal Financial Management Course (Debtor Education).  The Personal Financial Management Course is required AFTER the petition is filed and must be completed before receiving a discharge.  See the section titled "What is the Personal Financial Management Course (Debtor Education)?" for more information.

Who is eligible to file a Chapter 7 case?

A debtor must complete Official Form B122A-2 - Chapter 7 Means Test Calculation (commonly referred to as the means test).

To be eligible to file a Chapter 7 case, the debtor's current monthly income, as calculated on Official Form B122A-1, may not be higher than the state median income.  If the debtor's current monthly income is higher than the state median income, it is determined that the debtor could repay a level of unsecured debt and the filing of a Chapter 13 case may be appropriate. 

E:FILING GUIDANCE: This form is e:filed as part of the petition package.   When using BK Case Opening - Voluntary, you will be presented with a screen stating Presumption Arises.  You  must select either  yes or no from the selection box.

Click here for more information on means testing guidance. 

Where should the petition be filed?

The petition and all documents relating to the bankruptcy case must be filed at the Bankruptcy Court Clerk's Office located in the geographic area (commonly referred to as vicinage) in which the debtor is domiciled or in which the debtor maintains its residence, principal place of business, or principal assets.  The Bankruptcy Court for the District of New Jersey is divided into three units known as "vicinages" (See D.N.J. LBR 1002-1).

The Camden vicinage consists of Atlantic, part of Burlington (the townships of Cinnaminson, Delran, Edgewater Park, Evesham [Marlton], Maple Shade, Moorestown, Mt. Laurel, Palmyra, Riverside and Riverton), Camden, Cape May, Cumberland, Gloucester and Salem counties.

The Newark vicinage consists of Bergen, Essex, Hudson, Morris, Passaic, Sussex, and Union counties.

The Trenton vicinage consists of part of Burlington (excluded are the townships of Cinnaminson, Delran, Edgewater Park, Evesham [Marlton], Maple Shade, Moorestown, Mt. Laurel, Palmyra, Riverside and Riverton), Hunterdon, Mercer, Middlesex, Monmouth, Ocean, Somerset, and Warren counties.

E:FILING GUIDANCE: CM/ECF will automatically assign the vicinage based on the zip code entered.

What is the fee to file a Chapter 7 petition?

The filing fee for a Chapter 7 petition is $306.00.  The court does not accept cash or personal checks. EXCEPTION: Attorneys may pay by personal check bearing Esquire, Attorney at Law or any other designation that identifies you as an attorney.  Payment may be made by money order, certified check, or bank check.  Payments must be made payable to the Clerk, United States Bankruptcy Court.  The court will also accept credit cards previously approved by the court.  A Credit Card Payment form must be completed and attached to the pleading you are filing if filing conventionally.

If the full filing fee cannot be paid at the time the petition is filed, individual Chapter 7 debtors may apply for an installment schedule or a waiver of the fee.

To pay the filing fee in installments, file Form 3A Application to Pay Filing Fee in Installments.  Debtors can make up to four installment payments.  The final installment must be made within 120 days after the petition is filed.  If the debtor fails to pay any installment when due, the case may be dismissed and the debtor will not receive a discharge of debts. 

To apply for a waiver, file Form B3B - Application to Waive Chapter 7 Filing Fee (In Forma Pauperis).  By law, the judge may waive the filing fee only if the debtor's income is less than 150 percent of the official poverty line for a specific family size and the debtor is unable to pay the fee in installments.

E:FILING GUIDANCE:  (1) E:Filing attorneys must pay by credit card via the internet.  (2)  If you are requesting an installment schedule, e:file Form 3A using the Pay Filing Fees in Installments event  located in the Motions/Application category.  Click here for docketing instructions.  (3) If you are requesting a waiver of the fee, e:file Form B3B using the Waiver of Ch 7 Filing Fee event  located in the Motions/Application category.  Click here for docketing instructions.

Click here for more information on Poverty Guidelines

Click here for the complete Fee Schedule

What forms must be filed?

Click here for more information on Required Lists, Schedules, Statements and Fees

Note: The Bankruptcy Court Clerk's Office does not maintain hard copies of the official forms required for filing bankruptcy, but they may be obtained from the court's website www.njb.uscourts.gov under "National Forms."

E:FILING GUIDANCE:  Attorneys must enter "/s/ Attorney's Name" on the line where your signature would normally appear.  Click here for more guidance on this requirement.

How many copies of all forms must be filed?

If you are filing hard copies, include an original and one copy of all forms.

E:FILING GUIDANCE: Simply e:file all forms.  DO NOT submit hard copies unless directed to do so by the court. 

How should the forms be completed?

ALL BLANK SPACES AND LINES ON EACH FORM should be completed.  Some forms (Schedule E, F, G, and H, and the Statement of Financial Affairs) contain boxes to indicate that the debtor has nothing to report or a question does not apply.  On all other forms, the debtor should either insert "N/A" or "None" in response to any question or request for information that is not applicable or should cross out a printed statement that does not apply and initial the cross out.

Sensitive information should not be included in any document filed with the court unless such inclusion is required by statue, Federal Rules of Bankruptcy Procedure or Official Bankruptcy Forms, or the inclusion is otherwise necessary and relevant to the case.  You must remember that any personal information not otherwise protected will be available on the internet via WebPACER.

Social Security numbers should only include the last 4 digits, except when the full number is required.  Financial account numbers, dates of birth and names of minor children should only be included if required.  Exercise caution when filing any of the following:

• any personal identifying number, such as driver's license number
• medical records, treatment and diagnosis
• employment history
• individual financial information
• proprietary or trade secret information.

The Clerk's Office will not review documents for the purpose of redacting sensitive information. The court will image all pleadings as submitted even if they contain personal identifying information.

Click here for our court's Privacy Guidelines.

What if the debtor must file immediately?

The following MUST be filed:

• Official Form 101  - Voluntary Petition
• Official Form 121  - Statement About Your Social Security Numbers (this form is not required when e:filing)
• Credit Counseling Certificate
• Creditor Matrix (there must be at least one creditor on the creditor matrix)

In addition, you must include the full filing fee  OR Officlal Form 103A - Application for Individuals to Pay the Filing Fee in Installments OR Official Form 103B Application to Have the Chapter 7 Filing Fee Waived.  See "What is the fee to file a Chapter 7 petition?" for information on the Chapter 7 filing fee.

E:FILING GUIDANCE: When using BK Case Opening - Voluntary, you must select "Y" from the Deficiencies drop down list on the first screen.  Several screens later, you will be presented with a list of required documents and you must select the documents you are missing. 

What happens if all required forms are not filed at the time of filing the petition?

Failure to file all required documents at the time the petition is filed will result in the issuance of a  Deficiency Notice.  This notice advises debtors that they have 14 days from the date the petition is filed to submit all required documents or the bankruptcy case will be dismissed without further notice.  Debtors must request an extension of the 14 day deadline by application to the court.

Click here for the proposed order; Order Re: Extension of Time to File Schedules

E:FILING GUIDANCE: Use the Extend Time event in the Motions/Applications category and upload the proposed order as an attachment to the application.  Click here for docketing instructions.

How should deficient schedules be e:filed?

E:FILING GUIDANCE: Use the Missing Document(s) Filed event located in the Misc. Events category.  All missing documents must be uploaded as one .pdf using this event with the exception of the Credit Counseling Certificate.  This document must be e:filed separately using the Certificate of Credit Counseling event also located in the Misc. Events category.

What happens after all required documents are filed?

Shortly after the petition is filed, the United States Trustee appoints a trustee and the court will issue a Notice of Chapter 7 Bankruptcy Case, Meeting of Creditors & Deadlines.  This notice is sent to all creditors in the case and contains the following  information:

• Debtor's name
• Date/time/location of the First Meeting of Creditors (also known as 341 Meeting)
• Deadline to file a complaint objecting to discharge or dischargeability of debt
• Deadline to object to exemptions

Note: Please read the notice carefully.  The meeting may not be held in the courthouse, but may be held at another location.

What is the role of the trustee in the case?

The trustee is appointed by the United States Trustee to administer the case.  The primary functions of the trustee are to examine the assets of the estate, if any, liquidate non-exempt assets, and serve as the disbursing agent to the creditors.  The trustee technically becomes the temporary owner of  the debtor's non-exempt property.  The creditors are paid by selling non-exempt property of the debtor's estate.  If there are no non-exempt assets in the estate, the case is referred to as a "no asset" case.  Creditors need not file a proof of claim in a no asset case.  Creditors must file a proof of claim if assets are later recovered.

What is the First Meeting of Creditors and how should the debtor prepare for this meeting?

All debtors MUST attend the First Meeting of Creditors.  Failure to attend may result in the dismissal the debtor's case.  If a married couple files a joint case, both debtors must appear at the meeting.  At the meeting, the Chapter 7 Trustee will ask the debtor questions, under oath, about what he or she owes and owns, and debtor's income.

No later than seven (7) days before  the Meeting of Creditors, the debtor must send the following to the trustee:

• A copy of their most recent federal income tax return (or transcript of return).
• Copies of pay stubs received within 60 days before the date of filing of the bankruptcy petition.

Note:  DO NOT FILE PAY STUBS OR TAX RETURNS WITH THE COURT.  Remember, it is the sole responsibility of the parties in the case to redact sensitive information such as names of children, account numbers (except the last 4 digits), and dates of birth (except the year).  Only show the last 4 digits of a Social Security number.

The debtor must bring the following with them to the First Meeting of Creditors:

• Picture Identification;
• Proof of Social Security number;
• Market analysis of any real estate they own.

After filing, what happens to creditors' collection activities against the debtor?

Once the petition is filed with the court, the automatic stay will go into effect.  The automatic stay is an injunction that automatically stops lawsuits, foreclosure, garnishments and all collection activity against the debtor by their creditors for any debt which arose before the filing of the bankruptcy.

Note: There are exceptions which may result in the automatic stay not going into effect, or being limited in duration.  Some, but not all, exceptions are listed below:

• Debtor had a previous case pending within the preceding one-year period, but the case was dismissed.  In this situation, the automatic stay would terminate on the 30th day after filing the new case, unless the debtor applies for an extension of the automatic stay.

• Debtor had more than one previous case pending within the preceding one-year period, but the cases were dismissed.  In this situation, the automatic stay does not go into effect unless the debtor applies for imposition of the stay.

A creditor may file a Motion to Lift the Automatic Stay, which is a request by a creditor that, if granted, would allow the creditor to collect a debt against a debtor or the debtor's property that would otherwise be prohibited by the automatic stay.

How are schedules amended after they are filed?

The original schedules filed with the petition may need to be amended. See D.N.J. LBR 1009-1.  Click here for the form Amendment to Schedules D, E, F, G, H or List of Creditors.

The addition of new creditors requires a new creditor matrix containing only those creditors being added.  There is a fee of $30 to amend Schedules D, E, F, G or H.  This fee does not apply if you are simply amending the address of a listed creditor or adding the name and/or address of an attorney for a listed creditor

E:FILING GUIDANCE: Use the Amended List of Creditors event (click here for docketing instructions)  or the Amended Schedules event (click here for docketing instructions) located in Misc. Events category.  If a fee is required, CM/ECF will provide the credit card screens.

What is a discharge and how does the debtor receive the discharge?

A discharge releases a debtor from personal liability of certain debts known as dischargeable debts, and prevents the creditors owed those debts from taking any action against the debtor or the debtor's property to collect the debts.  The discharge also prohibits creditors from communicating with the debtor regarding the debt, including telephone calls, letters, and personal contact.

The debtor is eligible for a discharge usually between 60 and 90 days after the Meeting of Creditors, as long as the debtor:

• certifies (if applicable) that all domestic support obligations have been paid

• has not received a discharge in a Chapter 7 or Chapter 11 case within eight years preceding the filing of the new case

• has not received a discharge in a Chapter 12 or Chapter 13 case within six (6) years preceding the filing of the new case**

• does not have a complaint against them which objects to the discharge or the dischargeability of a debt

• has completed an approved personal financial management course and the Certificate issued by the course provider has been filed by the debtor or by the course provider.

** Note: When a new Chapter 7 case is filed, and a discharge was entered in a Chapter 12 or Chapter 13 case filed within the previous six (6) years, the court may not withhold the debtor(s) discharge.  However, creditors and parties in interest may file a complaint objecting to discharge under 727(a)(9).

Every debt is not discharged.  There are exceptions to the discharge, which include, but are not limited to:

• debts for alimony and child support;

• most student loans;

• debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs, and;

• debts for criminal fines or restitution.

What is the Personal Financial Management Course (Debtor Education)?

Debtors are required to complete an instructional course in personal financial management as a condition for receiving a discharge.  This course is in addition to the credit counseling requirement.  When the personal financial management course is completed, the debtor or approved course provider must file the Certificate issued by the course provider.  If a joint petition was filed, both debtors must attend the course and both debtors must file separate Certificates.   The Certificate must be filed within 60 days of the first date set for the Meeting of Creditors.  If the Certificate is not filed, the court may close the case without a discharge.  If the debtor then files a motion to reopen the case to allow the filing of a Certificate, the full filing fee due for filing such a motion is required.

There are limited exceptions to the personal financial management course requirement such as incapacity or disability (defined in 11 U.S.C. 109(h)) or active military duty in a military combat zone.  To be considered for one of the exceptions, a motion for exemption from financial management course must be filed, which will be heard by the court on an appropriate hearing date.

Click here for a list of approved Debtor Education Providers.

E:FILING GUIDANCE: To e:file Certificates, use the Financial Management Course Certificate event located in Misc. Events category.  Click here for docketing instructions.  To request an exemption, a motion must be filed and scheduled for an appropriate hearing date, using the Exemption from Financial Management Course and/or Certification in Support of Discharge event located in the Motions/Applications category.  Click here for docketing instructions.

Can the debtor keep certain secured property such as their car?

If a debtor would like to keep certain property, such as a car, they may "reaffirm" their debt.  A reaffirmation is an agreement between the debtor and the creditor indicating that the debtor is liable and will pay all or a portion of the money owed, even though the debt would otherwise be discharged in the case.  In return, the creditor promises to not repossess or take back the car or other property as long as the debtor continues to make payments.  Reaffirmation of a debt must be done before the discharge is entered in the case.  The reaffirmation agreement must be signed and filed with the court and the judge will decide if the reaffirmation agreement is approved.  The court must find that the reaffirmation does not impose undue hardship on the debtor and that it is in the debtor's best interest.  Reaffirmation agreements are voluntary.  If the debtor agrees to reaffirm a debt and fails to make the payment required, the creditor can take action against the debtor to recover any property and the debtor may remain personally liable for any remaining debt that they have reaffirmed.

Click link for Reaffirmation Agreement (Form B240A)

E:FILING GUIDANCE: Use the Approval of Reaffirmation Agreement event located in the Motion/Application category.  Click here for docketing instructions.