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 debt gets out of control, bankruptcy may be the best solution. But not all bankruptcies work the same way. Some are for individuals with low income. Others are for those with steady income who can repay part of their debts. Some are built to help businesses stay open while fixing their finances.
Fleysher Law Bankruptcy & Debt Attorneys helps people and businesses find the right path. We handle all types of bankruptcy cases. Whether you’re dealing with credit card debt, medical bills, or business debts, we can guide you through the bankruptcy process. Each chapter under the bankruptcy code has its own rules.
Knowing the difference between Chapter 11, Chapter 7, and Chapter 13 can help you choose wisely. Our goal is to make the process clear and help you get debt relief with as little stress as possible.
Chapter 11 is often used for business bankruptcy, but individuals with high debt can file it too. It allows you to reorganize your debts while keeping control of your property. This type of bankruptcy helps you make a plan to repay creditors over time.
The repayment plan is often flexible and shaped around your income and assets. Unlike Chapter 7, you do not have to sell everything you own. You continue operating your business or managing your assets while under the court’s protection.
In Chapter 11, the debtor stays in control. This is called being a "debtor in possession." You are not removed from your business or property. You keep running things but follow rules set by the bankruptcy court. You also report to the court and creditors. This gives you time and space to fix your finances while staying in charge.
Chapter 7 is called a liquidation bankruptcy. It is the most common type of bankruptcy for people who have little income or few assets. When you file, a court appointed trustee takes over your case. They review your property and may sell some nonexempt assets to repay creditors.
The trustee’s job is to sell assets that are not protected by law. These are called nonexempt assets. The money from these sales goes to repay creditors, including both secured debt and unsecured debts. Most people keep basic property like clothes, tools, and a car.
Chapter 7 is best for people who cannot afford monthly payments. It helps discharge many types of unsecured debts, such as medical bills and credit card debt. To qualify, you must pass a means test that looks at your income and expenses. Chapter 7 offers fast debt relief if you don’t have the means to repay what you owe.
Chapter 13 is a type of bankruptcy for individuals who earn regular income. It lets you keep your assets and catch up on debts through a repayment plan. That plan usually lasts 3 to 5 years and must be approved by the bankruptcy court.
Under Chapter 13, you do not lose your property. Instead, you make monthly payments to repay creditors. The court approves the plan and oversees your progress. This type of bankruptcy is helpful if you’ve fallen behind on mortgage payments or car loans but want to keep those items.
Chapter 13 is best for people with steady income who can afford to pay back at least a portion of their debts. If you can make monthly payments but need help managing them, Chapter 13 gives you time and structure to do so.
Chapter 11 and Chapter 7 serve very different purposes under the bankruptcy code, especially when it comes to businesses or individuals with complex financial needs. Chapter 11 is designed to help you reorganize your debts while continuing operations, while Chapter 7 focuses on liquidation and closing down. Knowing the main goals of each type of bankruptcy is key before filing.
Chapter 11 is a reorganization bankruptcy, which means it allows the filer to restructure their debts and create a repayment plan that works with their income and business operations.
In contrast, Chapter 7 is a liquidation bankruptcy where a trustee sells nonexempt assets, and the money from those sales is used to repay creditors. With Chapter 11, you work to save the business; with Chapter 7, the goal is to shut it down and settle what you owe.
One of the biggest benefits of Chapter 11 is that it allows a business to stay open during the bankruptcy process. This is important for companies that have long-term potential but need time to reorganize secured debt, unsecured debts, and other obligations.
As a debtor in possession, the business owner keeps control and can continue daily operations while working with the bankruptcy court and creditors on a repayment plan.
Unlike Chapter 11, Chapter 7 typically means the end of the business. Once the filing is complete, a court appointed trustee steps in, takes control of all business assets, and sells what is not exempt.
The proceeds go to pay back creditors, including unsecured creditors and secured creditors. After the process is finished, the business is dissolved and does not continue operating.
Chapter 11 and Chapter 13 both allow you to repay debts over time, but they are used in different situations depending on the amount of debt, income level, and financial goals. Chapter 11 is often used by businesses or individuals with large debts, while Chapter 13 is meant for individuals with steady income who can manage a structured payment plan.
One key reason someone may choose Chapter 11 over Chapter 13 is that Chapter 11 has no debt limits. Under Chapter 13, you must stay within strict limits for secured debt and unsecured debts, and if your total debt exceeds those caps, you won’t qualify.
Chapter 11 gives more room for high-debt individuals or businesses that owe a significant amount and need legal protection under the bankruptcy code.
Chapter 11 offers more freedom when creating a repayment plan, allowing you to propose terms that fit your income, assets, and future earnings. However, this flexibility comes with a much more complicated process.
There is more court oversight, longer timelines, and often higher legal fees. You must work closely with the bankruptcy court, and creditors can vote on whether they accept your plan, making it more challenging to complete.
In Chapter 13, your repayment plan follows a standard process and must be approved by the court. You make monthly payments to a trustee over three to five years, based on your disposable income. This type of bankruptcy is often easier to manage because the rules are clearly defined by bankruptcy law, and you don’t need creditor approval if the court finds your plan reasonable and fair.
Choosing the right type of bankruptcy depends on your income, the amount and type of debts you owe, and whether you want to keep your property or business. Each chapter offers a different solution based on your financial situation.
Chapter 7 is often the most suitable option for individuals who have little to no income, few assets, and are unable to make monthly payments toward their debts. It is a liquidation bankruptcy, meaning that a court appointed trustee may sell nonexempt assets to repay creditors, but most people who qualify under the means test keep essentials like clothing, household goods, and a car.
This type of bankruptcy can offer fast and complete debt relief from unsecured debts like medical bills and credit card debt.
If you have a steady income and want to keep your property while repaying your debts over time, Chapter 13 may be the best option. It gives you the ability to create a court-approved repayment plan that lasts three to five years and helps you catch up on things like mortgage payments or secured debt. It works well for those who don’t qualify for Chapter 7 but still need structured debt relief.
Chapter 11 is most helpful for business owners who want to continue operating or for individuals who have debts that are too high for Chapter 13. It allows you to reorganize your debts, negotiate with creditors, and build a custom repayment plan under bankruptcy court supervision.
Although it is more complex and expensive, it offers the flexibility and control needed in cases involving large amounts of secured and unsecured debts.
1. What debts can be eliminated when filing bankruptcy?
When filing bankruptcy, many debt obligations like medical bills and credit cards can be discharged. But some nondischargeable debts, including student loans, child support, and certain taxes, usually remain. In rare cases, you can eliminate student loans by proving undue hardship. An experienced bankruptcy attorney can explain which remaining debts you may still owe.
2. How does bankruptcy affect my credit report and personal finances?
A bankruptcy filing stays on your credit report for up to 10 years, depending on the chapter filed. While it may lower your credit score at first, it can actually improve your long-term personal finance by clearing unmanageable debt. With smart planning and timely debt payments, many people begin rebuilding credit soon after discharge.
3. Can married couples file bankruptcy together?
Yes, filing jointly is common for married couples. It allows both spouses to handle their debt obligations in one case, saving time and legal fees. However, the United States Bankruptcy Court requires both people to submit complete financial details. This approach may not be ideal if only one person has significant debts or if one owns a limited liability company.
4. Do I need a bankruptcy lawyer, or can I file alone?
You are allowed to file without help, but bankruptcy laws are detailed and easy to misinterpret. Hiring a bankruptcy lawyer gives you access to someone who understands bankruptcy basics, court procedures, and how to avoid errors that can delay your case. This is especially helpful for wage earners, business owners, or anyone with complex other debts like personal injury claims.
5. What is a reaffirmation agreement and who should consider it?
A reaffirmation agreement is used when you want to keep paying a loan, like a car or home, after bankruptcy. It only makes sense if you have regular annual income and can make those debt payments on time. If you can’t afford it, reaffirming a loan can hurt your finances instead of helping. Speak with an experienced bankruptcy attorney before signing one.
If you're struggling with overwhelming debt, you don’t have to go through it alone. At Fleysher Law Bankruptcy & Debt Attorneys, we help individuals and businesses understand their options under the federal bankruptcy code. Whether you're considering Chapter 7, Chapter 13, or Chapter 11, our team is here to guide you with clear answers and trusted legal support.
We know that filing bankruptcy is a major step, and we take the time to understand your unique financial situation. Our goal is to help you protect your assets, stop creditor calls, and get a fresh financial start. With years of experience handling complex bankruptcy cases, we make the process easier to manage from beginning to end.
Contact us today to schedule your free initial consultation. Let our Florida bankruptcy lawyer help you explore your best path forward with confidence and peace of mind. We're here when you’re ready.
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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