Chapter 7

• If you file Chapter 7 bankruptcy, the court will want to see your average income for the six months before you file. If it's below the New Jersey median for a family of your size, you qualify. The court will proceed to liquidate any of your assets not protected by state or federal law and pay off your creditors, then discharge your remaining debts. If your income is above the median, you have to pass a means test adjusting your income for living expenses in your part of the state.
  
  

Chapter 13

• In Chapter 13, you don't have to sell your assets. Instead you use your disposable income for the next three or five years --- three years if your income is below the New Jersey median --- to pay back your creditors before receiving a discharge. To qualify for Chapter 13, your debts must be under the federal maximum. In 2011, for example, debts secured by collateral must be under $1.08 million and unsecured debts below $360,475.
  
  

Requirements

• If you want the court to approve your bankruptcy filing, you'll have to meet several other conditions. You must complete a credit-counseling course in the six months before you file, and take a debt-management class before you emerge from bankruptcy. If you had a previous bankruptcy petition dismissed, you have to wait 180 days before you can file again. If you've complete bankruptcy before, you'll have to wait anywhere from two to eight years to file again, depending on which chapters you used.
  
  

Dismissal

• Even if you meet the formal requirements, the court could still refuse to grant you the bankruptcy discharge. If you fail to show up for a scheduled hearing, disobey a court order or the court discovers you've concealed some of your assets, those would be grounds for denying you a discharge. You can also be dismissed for missing payments on your Chapter 13 plan or neglecting to pay debts that can't be discharged, such as child support.