Which Bankruptcy Chapter Fits You? A Plain-English Decision Guide

The Bankruptcy Code offers several doors, and walking through the wrong one costs money, time, and sometimes property. The good news is that the chapter decision is not mysterious. It follows a sequence of questions that any honest advisor will walk through with you, and you can walk through most of them yourself before ever speaking to a lawyer.

Here is the sequence, in plain English.

Question 1: Is the debt personal or business?

Start here, because it splits the analysis in half.

If most of your debt is personal, meaning credit cards, medical bills, personal loans, a mortgage, or a car loan, you are choosing between Chapter 7 and Chapter 13. If most of the debt comes from a business, whether it is the company's own debt or your personal liability for it, the menu expands to include Chapter 11 and its streamlined small business version, Subchapter V.

There is also a quiet advantage for former business owners: if your debts are primarily business debts, the Chapter 7 means test does not apply to you at all, regardless of your income.

Question 2: Does your income pass the means test?

For personal filers, the means test is the gate to Chapter 7. The short version: take your household's average monthly income for the 6 full months before filing, annualize it, and compare it to the Florida median for your household size. At or below the median, you generally qualify for Chapter 7. Above it, a more detailed expense calculation decides the question.

The medians effective April 1, 2026 are $69,876 for one person, $86,523 for two, $97,540 for three, and $114,761 for four, plus $11,100 for each additional member. The full mechanics are in our guide to the Florida bankruptcy means test.

If you pass, Chapter 7 is on the table. If you do not, Chapter 13 usually becomes the consumer path, with a plan length of 5 years.

Question 3: Are you behind on property you want to keep?

This question often decides the case even when the means test does not.

Chapter 7 discharges debt, but it has no mechanism for catching up missed mortgage or car payments over time. If you are behind on a home or vehicle you intend to keep, Chapter 13 lets you cure those arrears through a 3 to 5 year plan while the automatic stay holds the foreclosure or repossession at bay.

If you are current on your secured debts, or willing to surrender the property, Chapter 7 stays in play and is usually faster and cheaper.

Question 4: Do you own property an exemption will not protect?

Florida's exemptions are generous, particularly for the homestead and retirement accounts, and most Chapter 7 filers here keep everything they own. But filers with significant non-exempt property, such as a second home, valuable collections, or substantial equity in vehicles, face a real choice: let the Chapter 7 trustee administer the property, or use Chapter 13 to keep it by paying its value through the plan.

Question 5 for business owners: viable or not?

For a business, the chapter question begins with a harder one: is the business worth saving? A company that earns real revenue but carries too much debt is a reorganization candidate. A company whose model no longer works is a wind-down candidate, and reorganizing it just spends money delaying the same ending.

If reorganization makes sense and total debts are at or under the $3,424,000 cap, Subchapter V offers Chapter 11 power on a 90 day plan clock with the owner in control. Above the cap, or with a complex creditor body, traditional Chapter 11 is the tool.

If the business winds down, the owner's personal liability often becomes the real case, and that analysis loops back to questions 1 through 4.

The factors that bend the answer

Real cases mix factors, and several can change the result of the clean sequence above:

• Prior bankruptcies. Recent prior filings can limit discharge eligibility or shorten the automatic stay.
• Tax debt. Some taxes can be discharged, others must be paid, and Chapter 13 can put them on a protected schedule.
• Support obligations. Domestic support arrears must be paid in full through any plan.
• Co-signers. Chapter 13 includes a co-debtor stay that protects co-signers on consumer debts; Chapter 7 does not.
• Timing. A bonus, a tax refund, or a recent property transfer can change the picture, sometimes the filing date matters as much as the chapter.

This is why the sequence is a guide, not a verdict, and why an attorney reviews everything before any case is filed.

See your options

You can walk this decision tree with your own numbers in about 3 minutes using our free 3-minute options check, or call Recalde Fresh Start at (305) 792-9100.