Facing financial challenges is a part of life. But if you're one of the millions struggling financially due to a job loss, illness, or another event in Florida, bankruptcy can help. Here, you'll find an explanation of Chapters 7 and 13, checklists to help you understand the process and stay organized, and Florida's property exemption laws and filing information.
However, we couldn't squeeze everything into this article, so be sure to check out its companion, What You Need to Know to File for Bankruptcy—you'll find lots more details there.
In most respects, filing for bankruptcy in Florida isn't any different than filing in another state. The bankruptcy process falls under federal law, not Florida state law, and it works by unwinding the contracts between you and your creditors—that's what gives you a fresh start.
But Florida's laws come into play in a significant way. They determine the property you can keep in your bankruptcy case. You'll also need to know other filing information, which we explain after going over some basics.
Most people file either Chapter 7 or Chapter 13. If you don't know the differences between the two, you're not alone. The short explanation below and our handy Chapter 7 versus 13 chart will help clarify things.
Chapter 7 bankruptcy. Chapter 7 is often a bankruptcy filer's first choice for several reasons. It's quick, taking only a few months to complete. And it's cheap. You don't pay anything to creditors. It works well for those of us whose property consists of the essential items needed to live and work.
However, people with more assets could lose them, especially unnecessary luxury items. For instance, you might have to give up your RV, baseball card collection, or timeshare in the Bahamas, even your house or vehicle if you have too much equity in it or you're behind on the payments. Unlike Chapter 13, Chapter 7 doesn't have a payment plan option for catching up on late mortgage or car payments. So you could lose your home or car if you're behind when you file.
Chapter 13 bankruptcy. By contrast, Chapter 13 filers must pay creditors some or all of what they owe using a three- to five-year repayment plan. But the payment plan allows Chapter 13 to offer benefits not available in Chapter 7. For instance, not only do you keep all of your property, but you can save your home from foreclosure or your car from repossession. If you need time to repay a debt you can't discharge in bankruptcy, you can use this chapter to force a creditor into a payment plan. The biggest downside to this chapter? It can be expensive, and many people can't afford the monthly payment. Learn more about when filing Chapter 13 is better than Chapter 7.
Caution for businesspeople. Be sure to learn about the ins and outs of small business bankruptcies. The principles discussed apply to consumers only.
Bankruptcy wipes out many bills, like credit card balances, overdue utility payments, medical bills, personal loans, and more. You can even get rid of a mortgage or car payment if you're willing to give up the house or car that secures the debt. (Putting property up as collateral creates a "secured debt"—if you don't pay what you owe, the lender gets to take the property back.)
But you can't discharge all debts. Nondischargeable debts, like domestic support arrearages and recent tax debt, won't go away in bankruptcy, and student loans aren't easy to wipe out (you'd have to win a separate lawsuit). You'll want to be sure that bankruptcy will discharge (get rid of) enough bills to make it worth your while.
We all know that seeing the forest helps us recognize the trees, so it's probably a good time to consider the significant steps you'll take during your bankruptcy journey. Think of this checklist as a roadmap of sorts, but you can also use it to track your progress. The good news? You've already made headway on the first two items!
One of the main things you probably want to know is whether you'll lose what you own. You won't. In fact, you might not lose anything at all.
Finding out which of your assets you can protect is as simple as looking at Florida's exemption laws. You can keep property that appears on Florida's exemption list and the federal nonbankruptcy exemption list. The type of chapter you file will determine what will happen to any nonexempt property.
Here's how it works:
Here are some commonly used Florida property exemptions. Spouses filing together can double the amount on any property owned jointly, except for the homestead exemption. You'll find more common exemptions in Florida Bankruptcy Exemptions.
Also, you might be able to protect stimulus payments, tax credits, and child credits in bankruptcy with the federal COVID-19 recovery rebate exemption.
Exempt your property carefully. The bankruptcy trustee—the court-appointed official assigned to manage your case—will review the exemptions. A trustee who disagrees with your exemptions will likely try to resolve the issue informally. If unsuccessful, the trustee will file an objection with the bankruptcy court, and the judge will decide whether you can keep the property.
Example. Mason owns a rare, classic car worth $15,000, but the state vehicle exemption doesn't cover it entirely. Believing that the car qualifies as art—at least in his mind—Mason exempts it using his state's unlimited artwork exemption. The trustee disagrees with Mason's characterization and files an objection with the court. The judge will likely decide the vehicle doesn't qualify as art.
Purposefully making inaccurate statements could be considered fraudulent. Bankruptcy fraud is punishable by up to $250,000, 20 years in prison, or both.
You'll meet the initial requirement if you've never filed for bankruptcy before. Otherwise, check whether enough time has passed to allow you to file again. The waiting period varies depending on the chapter previously filed and the chapter you plan to file. Learn more about multiple bankruptcy filings.
You'll also need to meet specific chapter qualifications.
You'll qualify for Chapter 7 bankruptcy if your family's gross income is lower than the median income for the same size family in your state. Add all gross income earned during the last six months and multiply it by two. Compare the figure to the income charts on the U.S. Trustee's website (select "Means Testing Information").
Want an easy way to do this online? Use the Quick Median Income Test. If you find that you make too much, you still might qualify after taking the second part of the "means test." If, after subtracting expenses, you don't have enough remaining to pay into a Chapter 13 plan, you'll qualify for Chapter 7.
Qualifying for Chapter 13 can be an expensive proposition because the extra benefits come at a hefty price and many people can't afford the monthly payment. To qualify, you'll pay the larger of:
Find out more about calculating a Chapter 13 bankruptcy payment.
Most people find it worthwhile to get counsel. A bankruptcy attorney will help you:
You can expect creditors to call until you file. It's usually best to ignore them because telling creditors about your bankruptcy can encourage them to take more drastic collection steps before losing the right to collect altogether. However, if you hire counsel and refer creditors to your lawyer, they'll have to stop calling you.
Are you curious whether your case is simple enough to file yourself? Our quiz will help you identify potential complications while educating you about bankruptcy. You'll find it here: Do I Need a Lawyer to File for Bankruptcy?
Now that you've decided to file, the fun begins! Well, not really. The first step—gathering your financial information—can be a bit of a chore. But using our bankruptcy document checklist should help you organize the things you (or your attorney) will need.
After assembling the documents, your next step will be to prepare the paperwork. Here's what you'll need and where to find it.
Your case starts when you file your paperwork with the local bankruptcy court and either pay the filing fee or request a fee waiver. Being a large state, Florida has three bankruptcy districts—Northern, Middle, and Southern. Each has multiple locations serving various geographical areas and web pages where you can access filing instructions and local forms.
Clicking on the district name will take you to the court's homepage.
Courts are located in Gainesville, Panama City, Pensacola, and Tallahassee. To find your division, select "Locations" from the lower left navbar.
Courts are located in Fort Myers, Jacksonville, Orlando, and Tampa. To find your division, select "Locations/Phonelists" from the left navbar.
Courts are located in Miami, Fort Lauderdale, West Palm Beach. To find your division, go to the lower right portion of the home screen.
Be sure to check your Florida court website for local forms required in your Florida bankruptcy court district. If you need help, contact the court clerk.
Your creditors will stop bothering you soon after you file. It takes a few days because the court mails your creditors notice of the "automatic stay" order that prevents most creditors from continuing to ask you to pay them. Here's what will happen next:
These things all must happen before you get a Chapter 7 bankruptcy discharge. Chapter 13 filers will also attend a repayment plan confirmation hearing and complete the three- to five-year payment plan.
Did you know Nolo has been making the law easy for over fifty years? It's true—and we want to make sure you find what you need. Below you'll find more articles explaining how bankruptcy works. And don't forget that our bankruptcy homepage is the best place to start if you have other questions!
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We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated April 18, 2022