This page was written, edited, reviewed & approved by Emil J. Fleysher following our comprehensive editorial guidelines. Emil J. Fleysher, the Founding Partner, has 15+ years of legal experience as a bankruptcy attorney. Our last modified date shows when this page was last reviewed.
When your debt becomes too much to manage, filing bankruptcy may help. The bankruptcy code offers different chapters, each with its own rules, benefits, and risks. Two common types are Chapter 7 and Chapter 11. They both fall under federal law, but they work very differently. Knowing how each one works can help you make the right choice for your situation.
Fleysher Law Bankruptcy & Debt Attorneys helps individuals, business owners, and families across Florida understand their options. Whether you're dealing with medical bills, credit card debt, or missed mortgage payments, we can guide you through the bankruptcy process.
We’ll explain how the courts handle assets, what happens to your creditors, and how to get back on track. If you're thinking about filing bankruptcy, our team is here to help you make a clear, informed decision. Every case is different, and we’re ready to help you find the best path forward.
Chapter 7 is the most common type of bankruptcy used by people with low income or large amounts of unsecured debt. It is fast and can discharge most debts in just a few months. But you may have to give up some property if it is not protected by law.
Chapter 7 is often used when someone cannot keep up with bills and has no realistic way to repay what they owe. It is also used by small business owners who want to close their business and wipe out remaining debt. If your income is too low to make steady payments, this chapter may be the most helpful.
When you file under Chapter 7, a court appointed trustee takes control of any nonexempt assets. These are items the law does not protect, like a second car, expensive jewelry, or valuable collectibles. The trustee may sell these items to repay creditors. However, most people who file Chapter 7 have no property that must be sold.
Once your case is filed and reviewed, you may receive a bankruptcy discharge in about 3 to 6 months. This means that most unsecured debts such as credit card debt, personal loans, and medical bills are wiped out. After that, you are no longer legally required to pay them, and you can begin rebuilding your finances.
Chapter 11 is more complex than Chapter 7, but it offers more flexibility. It is most often used by businesses, but some individuals can use it too. The goal is to stay in control of your property and income while reorganizing your debts.
While Chapter 11 is often associated with large corporations and business entities, it is available to individuals as well, especially those with high secured debt, unsecured debt, or assets they want to keep. Unlike Chapter 7, this chapter focuses on restructuring rather than liquidation.
One major benefit of Chapter 11 is that the filer, known as the debtor, stays in control of their financial affairs and property. You are not required to sell everything. Instead, you keep running your business or managing your personal finances while working out a new repayment plan. This flexibility helps you keep your income flowing and maintain stability.
You must submit a detailed plan showing how you will repay creditors over time. The bankruptcy court will review and must approve this plan before it becomes official. It often includes changes to mortgage payments, credit terms, and repayment amounts. Once the court signs off, the plan is legally binding for all parties involved.
Although both are part of the bankruptcy code, Chapter 7 and Chapter 11 are designed for very different purposes and types of debt situations. The right choice depends on your income, the amount and type of debt you owe, and whether you want to keep your property or business.
The main purpose of Chapter 7 is liquidation, which means that any nonexempt assets may be sold by a court appointed trustee to help repay creditors.
In contrast, Chapter 11 is a reorganization process that lets the filer keep their property and restructure how they will repay their debts over time. This is one of the most important differences between the two.
People who file under Chapter 7 usually have low income, little property, and no way to make monthly payments on their debt. It is often the best choice for individuals facing large amounts of unsecured debt like medical bills or credit card debt.
On the other hand, Chapter 11 is typically used by business entities or individuals with high-value assets and more complex financial affairs.
One of the key differences in the bankruptcy process is how long it takes to complete. A standard Chapter 7 case is often completed in as little as 3 to 6 months. However, Chapter 11 can take years, especially for cases involving detailed repayment plans, regular updates to the court, and negotiations with creditors. The longer time period can be a downside, but it gives more flexibility.
When you file Chapter 7, a court appointed trustee takes control of your nonexempt assets, and you may lose property that isn’t protected by law. In Chapter 11, you remain in control of your property and business as a “debtor in possession.”
This means you handle your own finances while working with the bankruptcy court to follow the approved plan.
Chapter 7 is usually faster, easier, and less expensive, which is why most individuals choose it. In contrast, Chapter 11 is more costly and involves complex legal work, more detailed filings, and frequent court supervision.
It’s better suited for cases where more is at stake or the filer needs time to manage and repay large amounts of secured debt or unsecured debt.
Before you decide to file under Chapter 7, it’s important to understand what it offers and what it might cost you. While this type of bankruptcy is a fast way to get rid of debt, it also has limits.
Here are the main advantages and disadvantages so you can make a smart decision for your situation:
Chapter 11 bankruptcy gives individuals and businesses more control and flexibility, but it also comes with higher costs and a longer timeline. Understanding the trade-offs can help you decide whether this type of bankruptcy is the right option based on your financial situation, goals, and the nature of your debt and assets.
1. What is Chapter 7 commonly referred to as, and how does it work?
Chapter 7 is commonly referred to as a liquidation bankruptcy because non-exempt assets may be sold to repay debts. After filing with the United States Bankruptcy Court, a trustee reviews your case and may sell property that isn’t protected. The process is designed to provide a quick fresh start, especially for those with low disposable income and no way to make ongoing payments.
2. Who qualifies to file for Chapter 7 bankruptcy?
To file for Chapter 7 bankruptcy, you must pass the means test, which looks at your income and expenses to see if you qualify. If your regular income is below a certain level, or you have little to no disposable income, you may be eligible. This option is often used by a wage earner who cannot keep up with debt due to job loss, medical bills, or other financial hardship.
3. Can married couples file bankruptcy together?
Yes, under bankruptcy laws, married couples can file jointly. This means both spouses list their debts, assets, and income in the same case. In many circumstances, joint filing helps reduce costs and protect shared property. However, it’s important to speak with an attorney to determine if it’s the best choice for your situation.
4. What debts are usually repaid in Chapter 11 bankruptcy?
In Chapter 11, the debtor agrees to a repayment plan approved by the court. This plan often includes paying secured creditors (those who hold collateral, like mortgage or auto lenders) and at least a portion of unsecured debts over time. The flexibility of Chapter 11 allows for custom terms based on your income, business structure, and overall goals.
5. Is credit counseling required before filing bankruptcy?
Yes. The federal bankruptcy code requires anyone filing bankruptcy to complete a credit counseling course before their case can proceed. This rule applies to all bankruptcy cases and ensures you understand all your legal options. Proof of completion must be filed with the United States Bankruptcy Court to avoid case dismissal.
If you're thinking about filing for Chapter 7 bankruptcy or exploring other options, we’re here to help. At Fleysher Law Bankruptcy & Debt Attorneys, our team has years of experience handling complex bankruptcy cases throughout Florida. Whether you’re a wage earner, a business owner, or simply overwhelmed by debt, we’ll help you understand your rights under the bankruptcy laws and guide you toward real solutions.
We offer a free consultation to review your financial circumstances and explain what to expect in your case. From passing the means test to protecting your assets or managing secured creditors, we’re committed to making the process clear and stress-free. Our goal is to help you achieve a true fresh start and regain control of your finances.
Contact us today to speak with a Florida bankruptcy lawyer you can trust. The right support makes all the difference. Let us help you take that first step forward.
Emil specializes in consumer bankruptcy, debt settlement, and mortgage modification, offering a holistic approach to solving mortgage and debt problems. Emil listens to clients, understands their circumstances and goals, and helps them make the right choices by presenting all options and contingencies.
He is dedicated to helping South Floridians regain their financial freedom from overwhelming debt caused by high interest credit cards, bad mortgage loans, and uninsured medical expenses.
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