Running a small business in Florida is hard work. When sales slow down or one big customer disappears, debt can stack up fast. Vendors call. Credit card balances grow. Maybe you put personal money into the business and now both you and the company are struggling.
The good news is that bankruptcy law gives small business owners several different paths. Which one fits depends on how your business is set up, who owes the debt, and what you want to happen next.
First, figure out who actually owes the debt
This is the question that shapes everything else.
If you are a sole proprietor, you and the business are the same person under the law. Every business debt is your personal debt. Your personal bankruptcy covers all of it.
If you formed an LLC or a corporation, the company is a separate legal person. The company owes its own debts. But here is the catch: most lenders and landlords make small business owners sign personally for company debts. If you signed personally, that debt follows you home even though the company borrowed the money.
So before picking a chapter, make a list. For each debt, ask: does the company owe this, do I owe this, or do we both owe it?
Option 1: Chapter 7 for you personally
A personal Chapter 7 can wipe out your personal liability on most unsecured debts. That includes credit cards, personal loans, and business debts you signed for personally.
Two things to know:
The means test compares your household income over the last six months to the Florida median. As of April 1, 2026, the median is $69,876 for a one-person household and $86,523 for two. But if your debts are mostly business debts rather than consumer debts, the means test may not apply to you at all. Many business owners qualify for Chapter 7 this way even with decent income.
Chapter 7 also involves a trustee who can sell property that is not protected by an exemption. If you own valuable business equipment or inventory in your own name, that matters. A careful review before filing can tell you what is protected.
Option 2: Chapter 13 repayment plan
Chapter 13 lets you keep your property and repay some debt through a three to five year plan based on what you can afford. It works well when you are behind on a mortgage or car loan, because Chapter 13 cures arrears over the life of the plan while the regular payments continue.
Chapter 13 has debt limits, so owners with very large debts may not fit. It is only available to individuals, not to the company itself. If the company needs help too, keep reading.
Option 3: Subchapter V for the business itself
Subchapter V is a streamlined reorganization built for small businesses. The business keeps operating, the owner usually keeps ownership, and debts get restructured through a plan that typically runs three to five years.
To qualify, total debts must be under $3,424,000, and at least half of those debts must come from business activity. Compared to a traditional Chapter 11, Subchapter V is faster and cheaper, and there is usually no creditor committee.
You can read more in our pillar guide on Subchapter V small business bankruptcy.
Quick comparison
| Option | Who files | Main goal |
|---|---|---|
| Chapter 7 | You personally | Wipe out personal liability on qualifying debts |
| Chapter 13 | You personally | Keep property, catch up on arrears, repay what you can afford |
| Subchapter V | The business (or owner) | Keep the business running and restructure its debts |
Some owners use two of these together. For example, the company files Subchapter V to keep operating while the owner files personally to deal with debts they signed for.
The automatic stay protects you right away
The moment any of these cases is filed, the automatic stay takes effect. It stops collection calls, lawsuits, garnishments, foreclosure sales, and repossessions at filing. That breathing room is often what lets an owner think clearly for the first time in months. Our automatic stay explained guide covers the details.
What about your partners?
If you co-own the business, your personal filing affects the company and your co-owners in specific ways. Your ownership interest becomes part of your bankruptcy estate, and debts that a partner also signed for do not go away for that partner. We cover this in business partners and personal bankruptcy.
Proving your income as an owner
Business owners rarely have simple pay stubs. Courts want profit and loss statements and bank records instead. Our guide on proving income when you are self-employed walks through exactly what to gather.
This article is general information, not legal advice. Every business situation is different, and small facts can change which option fits.
See your options
You do not have to guess which path makes sense. Start with a free 3-minute options check or call Recalde Fresh Start at (305) 792-9100.