If you are filing for bankruptcy in New Jersey, then you need to be familiar with chapter 7 and chapter 13 bankruptcy. The choice on which category to file depends on your income level. 

You are eligible to file for chapter 7 bankruptcy if you fall below a certain income level. Also, it is easier to file chapter 7 bankruptcy than filing chapter 13. The process of filing chapter 7 bankruptcy is less complicated and less time-consuming. 

Typically, about 71% of bankruptcy cases are Chapter 7 cases. The other 21% is chapter 13 bankruptcy. So, what is the main difference between the two categories? 

You will file for a chapter 7 bankruptcy if you genuinely cannot afford to foot your bills. For you to qualify, you must prove that your earnings are less than the median income for a standard family of six persons in your state. 

The New Jersey court will administer a means test if your income is higher than the median income of your state. You must pass this test before being declared bankrupt under chapter 7.  The means test is a method that a court will use to determine whether you genuinely need relief. 

Under Chapter 13 bankruptcy, you must prove to the court that although you currently have a stable source of income, you also have substantial unsecured debts such as car loans, credit loans, and other personal loans. You should also seek to prove that your income is not enough to cover for the debts and still have some to cover for your living expenses.