When Financial Storms Hit Florida Shores
Picture this: Bills piling up like storm clouds on the horizon. Collection calls coming in more frequently than afternoon rain showers. Your financial situation feeling as overwhelming as a Category 5 hurricane bearing down on Tampa Bay.
If this sounds familiar, you’re not alone. Many Floridians find themselves facing financial distress each year, and bankruptcy protection might be the lifeline you need. But like choosing between hurricane shutters or evacuation, deciding between Chapter 7 and Chapter 13 bankruptcy requires careful consideration of your unique situation.
Understanding Your Florida Bankruptcy Options
Florida bankruptcy law follows the federal Bankruptcy Code while incorporating state-specific exemptions and requirements. Both Chapter 7 and Chapter 13 can provide significant debt relief, but they work in fundamentally different ways.
Let’s break down these options without the complicated legal jargon so you can begin to see which path might work best for your financial recovery.
How Chapter 7 Bankruptcy Works in Florida
Chapter 7 bankruptcy is often called “liquidation bankruptcy.” Here’s why:
- It involves the court appointing a trustee who can sell certain assets to pay creditors
- Most unsecured debts (like credit cards and medical bills) are completely discharged
- The process typically completes within 3-4 months
- You get immediate relief through the “automatic stay” that halts collection activities
In Florida, Chapter 7 filers must pass the “means test” established by 11 U.S.C. § 707(b)(2). This test compares your income to Florida’s median income for your household size. If your income falls below the median, you automatically qualify. If it’s above, you’ll need to complete a more detailed analysis of your income and expenses.
Florida’s bankruptcy laws are particularly favorable when it comes to protecting your home through the homestead exemption found in the Florida Constitution, Article X, Section 4. This exemption allows you to protect an unlimited amount of equity in your primary residence, provided you’ve owned the property for at least 1,215 days and the property doesn’t exceed half an acre in a municipality or 160 acres elsewhere.
Who typically benefits from Chapter 7?
- People with primarily unsecured debts (credit cards, medical bills)
- Those with income below Florida’s median or who pass the means test
- Individuals with few non-exempt assets they need to protect
- People needing quick financial relief without a long-term payment plan
How Chapter 13 Bankruptcy Works in Florida
Chapter 13 bankruptcy is often called “reorganization bankruptcy” or “wage earner’s plan.” Here’s what makes it different:
- You keep your property while repaying some or all of your debts through a 3-5 year court-approved payment plan
- The amount you repay depends on your income, expenses, and types of debt
- You must have regular income sufficient to make plan payments
- It can help save homes from foreclosure by allowing you to catch up on mortgage arrears
Florida bankruptcy courts handle Chapter 13 cases under 11 U.S.C. §§ 1301-1330. The Middle District of Florida (covering Brandon and surrounding areas) has specific local rules governing how these cases proceed.
A key advantage for Floridians in Chapter 13 is the ability to strip off wholly unsecured second mortgages or home equity lines of credit (HELOCs) in certain situations, effectively converting them from secured to unsecured debt.
Who typically benefits from Chapter 13?
- Homeowners behind on mortgage payments who want to avoid foreclosure
- People with regular income above the median or who don’t pass the Chapter 7 means test
- Those with valuable non-exempt assets they want to protect
- Individuals with tax debts, student loans, or other debts that can’t be discharged in Chapter 7
- Debtors who previously received a Chapter 7 discharge within the past eight years
Florida-Specific Bankruptcy Considerations
Florida Exemptions
Florida is an “opt-out” state, meaning residents must use Florida’s exemptions rather than federal bankruptcy exemptions. Some key Florida exemptions include:
- Homestead: Unlimited value for qualifying properties (Florida Constitution, Article X, Section 4)
- Personal property: Up to $1,000 in general personal property (Fla. Stat. § 222.25)
- Motor vehicle: Up to $1,000 in equity (Fla. Stat. § 222.25)
- Wildcard exemption: Up to $4,000 in any personal property if you don’t claim homestead (Fla. Stat. § 222.25(4))
- Retirement accounts and pensions (various Florida statutes)
- Wages: Generally exempt for heads of family up to $750 per week (Fla. Stat. § 222.11)
Florida Means Test
The means test uses Florida-specific median income figures, which are regularly updated. As of 2025, the median annual income levels for Florida households are:
- Single individual: $61,784
- Family of two: $76,914
- Family of three: $85,250
- Family of four: $102,912
(Note: These figures are updated quarterly; always check the most current figures with your attorney)
Side-by-Side Comparison: Chapter 7 vs. Chapter 13 in Florida
| Feature | Chapter 7 | Chapter 13 |
| Timeline | 3-4 months | 3-5 years |
| Effect on credit | Remains on credit report for 10 years | Remains on credit report for 7 years |
| Home with equity | May lose home equity above exemption amount | Can keep home and catch up on missed payments |
| Car loans | Must be current, redeem, or surrender | Can catch up on arrears through the plan |
| Income requirement | Must pass means test | Must have regular income to make plan payments |
| Previous bankruptcy | No Chapter 7 within past 8 years | No Chapter 13 within past 2 years |
| Second mortgages | Cannot be eliminated | Can be “stripped off” if underwater |
| Tax debts | Recent taxes not dischargeable | Can be paid over time through the plan |
| Attorney fees | Typically paid upfront | Often included in the payment plan |
When Chapter 7 Makes More Sense for Florida Residents
Chapter 7 might be your better option if:
- You primarily have unsecured debts like credit cards and medical bills that can be fully discharged.
- You don’t own a home or have little equity in your property, making Florida’s generous homestead exemption less relevant to your situation.
- You have lower income that passes the Florida means test without complications.
- You need quick relief and don’t want to be in bankruptcy for several years.
- You don’t have significant assets beyond what Florida exemptions can protect.
Consider this real-world scenario: Maria, a Tampa resident, has $35,000 in credit card debt and $15,000 in medical bills. She rents her apartment, owns a car worth $8,000 with a $7,500 loan, and makes $45,000 annually. Chapter 7 would likely allow her to eliminate her unsecured debts while keeping her car by continuing payments.
When Chapter 13 Makes More Sense for Florida Residents
Chapter 13 might be your better option if:
- You’re behind on mortgage payments and want to save your home from foreclosure.
- You have significant non-exempt assets you want to protect.
- Your income is too high to qualify for Chapter 7 under Florida’s means test.
- You have tax debts or student loans that need management (though not typically dischargeable).
- You have a second mortgage or HELOC that could potentially be stripped if your home’s value is less than your first mortgage.
Consider this example: Carlos owns a home in Orlando worth $350,000 with a first mortgage balance of $320,000 and a second mortgage of $50,000. He’s fallen behind on payments after a medical emergency. With Chapter 13, Carlos could spread his mortgage arrears over a 5-year plan, potentially strip off the second mortgage (since the home’s value is less than the first mortgage), and protect his home using Florida’s homestead exemption.
Florida Bankruptcy Filing Requirements
Regardless of which chapter you choose, you’ll need to:
- Complete credit counseling from an approved provider within 180 days before filing (11 U.S.C. § 109(h))
- File various documents with the bankruptcy court, including:
- Bankruptcy petition
- Schedules of assets and liabilities
- Schedule of income and expenses
- Statement of financial affairs
- Credit counseling certificate
- Pay filing fees (unless granted a fee waiver):
- Chapter 7: $338
- Chapter 13: $313
- Attend the 341 meeting of creditors (typically 20-40 days after filing)
- Complete a financial management course before receiving a discharge
The Road to Financial Recovery: What Happens After Filing
After Chapter 7:
- Most unsecured debts are discharged within 3-4 months
- You keep all exempt property
- You can begin rebuilding credit immediately
- Bankruptcy remains on your credit report for 10 years
After Chapter 13:
- You make regular payments to the trustee for 3-5 years
- The trustee distributes payments to creditors according to the plan
- You receive a discharge after completing all plan payments
- Bankruptcy remains on your credit report for 7 years after discharge
Key Takeaways
- Chapter 7 offers quick relief through liquidation but may not protect all assets
- Chapter 13 provides a structured repayment plan that can save homes from foreclosure
- Florida’s homestead exemption offers substantial protection for your primary residence
- The means test determines Chapter 7 eligibility based on your income relative to Florida’s median
- Local bankruptcy rules in Florida’s districts may affect how your case proceeds
- Both chapters provide immediate relief through the automatic stay
- Your specific financial situation should guide which chapter is right for you
Frequently Asked Questions
Can I file for bankruptcy without an attorney in Florida?
While technically possible, it’s rarely advisable. Florida bankruptcy laws involve complex federal and state interactions. The success rate for pro se (self-filed) bankruptcies is significantly lower than for those with legal representation.
How long must I live in Florida to file bankruptcy here?
You must have lived in Florida for at least 91 days before filing. However, to use Florida’s exemptions (particularly the homestead exemption), you generally need to have lived in the state for 730 days (2 years) before filing.
Will bankruptcy stop a Florida foreclosure?
Yes, filing either chapter immediately stops foreclosure proceedings through the automatic stay provision of 11 U.S.C. § 362. However, Chapter 13 provides better long-term protection if you want to keep your home.
Can I keep my car if I file bankruptcy in Florida?
Florida provides a $1,000 motor vehicle exemption (Fla. Stat. § 222.25). If you don’t claim a homestead exemption, you can use the $4,000 wildcard exemption as well. Additionally, you can often keep financed vehicles by continuing to make payments.
How will bankruptcy affect my credit score?
A bankruptcy filing typically lowers your credit score by 150-240 points initially. Chapter 7 remains on your credit report for 10 years, while Chapter 13 remains for 7 years. However, many people see credit improvement within 1-2 years after filing if they practice good financial habits.
What debts can’t be discharged in Florida bankruptcy?
Certain debts remain non-dischargeable in both chapters, including:
- Recent tax obligations
- Student loans (except in rare hardship cases)
- Child support and alimony
- Court fines and restitution
- Debts from fraud or willful/malicious actions
Can I file bankruptcy if I previously filed in Florida?
Time restrictions apply:
- Chapter 7 after Chapter 7: Must wait 8 years
- Chapter 13 after Chapter 13: Must wait 2 years
- Chapter 7 after Chapter 13: Must wait 6 years (with exceptions)
- Chapter 13 after Chapter 7: Must wait 4 years
Contact Us for Personalized Guidance
Financial distress is stressful, but you don’t have to face it alone. Every financial situation is unique, and what works for your neighbor might not be right for you.
At Golden Law Group, we’ve helped thousands of Tampa Bay area residents find their path to financial freedom. We provide personalized guidance based on your specific circumstances, goals, and Florida’s bankruptcy laws.
Take the first step toward financial relief today. Schedule a free consultation with one of our experienced Brandon bankruptcy attorneys to discuss whether Chapter 7 or Chapter 13 is right for you. We’ll help you understand all your options and develop a strategy tailored to your needs.
Don’t let financial worries control your life any longer. Contact us today to begin your journey to a fresh financial start.
