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Florida debt law

Bankruptcy vs debt settlement in Florida

Florida's bankruptcy exemptions protect a home with no dollar cap, within size limits. Here is how Chapter 7, Chapter 13 and debt settlement compare for Floridians, and when bankruptcy is the better choice.

Written by the Clear Financial team

Last updated

Facts verified

Who each option fits

Three tools, for different situations.

Debt settlement

What we do

Fits if

  • You can save one steady amount each month
  • You owe $10,000 or more in unsecured debt
  • You are not being sued or garnished right now

Watch out for

  • No court protection: creditors can keep collecting and sue
  • Your credit score will drop during the program
  • Fees apply, and forgiven debt may be taxable

Chapter 7 bankruptcy

Fits if

  • Your income is under the Florida median, or you pass the means test
  • Most of what you own is protected by Florida exemptions
  • You are being sued or garnished and need it to stop

Watch out for

  • Property Florida does not protect can be sold
  • Can be reported for up to 10 years
  • Most student loans, recent taxes and support stay

Chapter 13 bankruptcy

Fits if

  • You have steady income and want to keep your property
  • You are behind on a home or car you want to keep
  • Your income is above the Florida median

Watch out for

  • A 3 to 5 year plan you must keep up
  • Court and attorney fees, and a public court record
  • Can be reported for up to 10 years

Side by side

Settlement, Chapter 7 and Chapter 13, for Floridians.

The same rows as our national comparison, with the Florida details that often decide it: your home, your car, and what a court filing costs.

What we compare What we do
Debt settlement		Chapter 7 in FloridaChapter 13 in Florida
What it isWe negotiate each debt down; you pay the settled amounts from an account in your name.A federal court case. A trustee sells property Florida law does not protect, and most unsecured debt is discharged.A federal court case. You repay what a court-approved plan requires over 3 to 5 years, and the rest of the eligible debt is discharged.
What it costsThe settled amounts plus our fee, charged only after a settlement is reached and shown as its own line. Forgiven debt may be taxable.Court fees of $338, plus an attorney.Court fees of $313, plus an attorney and the plan payments.
How longMost programs run 24 to 48 months.Often a few months from filing to discharge.A 3 to 5 year plan, set by your income.
Lawsuits and garnishmentNo court protection. Creditors can keep collecting and can sue.The automatic stay stops most collection, including lawsuits and garnishment, when you file.The same automatic stay when you file.
Your home and carNo trustee is involved, but a creditor who wins a judgment can try to collect from property Florida law does not protect.Florida homestead protection applies, within its limits, and one car up to $5,000 of equity.Usually you keep your property, including a home or car you keep paying for.
Credit reportYour score will drop during the program.Can be reported for up to 10 years.Can be reported for up to 10 years.
Tax on forgiven debtForgiven debt may be taxable income (Form 1099-C).Debt discharged in bankruptcy is not taxable income.Debt discharged in bankruptcy is not taxable income.

If a debt management plan or bankruptcy fits you better, we will tell you so. Free nonprofit credit counseling is a good first call for many people, and we will point you there when it is.

What does Florida let you keep in bankruptcy?

Florida uses its own exemptions instead of the federal list. These are the ones that come up most for households with credit card and medical debt. Exemptions have conditions, so confirm yours with a bankruptcy attorney.

Florida bankruptcy exemptions
PropertyWhat is protectedWhere the law says it
Your home (homestead)Up to 1/2 acre in a city or 160 acres outside one, no dollar cap. A home bought within 1,215 days of filing has a federal cap, adjusted to $214,000 from April 1, 2025.Fla. Const. Art. X, s. 4; 11 U.S.C. 522(p) (Florida Legislature, opens in a new tab)
One carUp to $5,000 of your interest in a single motor vehicleFla. Stat. 222.25(1) (Florida Legislature, opens in a new tab)
Personal property$1,000, plus up to $4,000 more if you do not claim a homestead exemptionFla. Const. Art. X, s. 4; Fla. Stat. 222.25(4) (Florida Legislature, opens in a new tab)
Retirement accountsQualified plans and IRAs, including 401(k), 403(b), 457(b) and Roth accountsFla. Stat. 222.21 (Florida Legislature, opens in a new tab)
Life insurance and annuitiesCash surrender value of life insurance and annuity proceedsFla. Stat. 222.14 (Florida Legislature, opens in a new tab)
WagesAll take-home pay of a head of family earning $750 a week or lessFla. Stat. 222.11 (Florida Legislature, opens in a new tab)

Does your income qualify for Chapter 7 in Florida?

Chapter 7 uses a means test. If your household income is above the state median (U.S. Courts, opens in a new tab), a further test looks at what you could repay. Below it, the means test is usually not a barrier. These are the Florida medians the U.S. Trustee Program uses.

Florida median family income for the bankruptcy means test, cases filed on or after July 15, 2026
Household sizeFlorida median income
1 person$69,876
2 people$86,523
3 people$97,540
4 people$114,761
Each person over 4Add $11,100

These are the U.S. Trustee Program figures for cases filed on or after July 15, 2026 (the current table (U.S. Trustee Program (DOJ), opens in a new tab)). They change during the year; check the table on the day you file.

Which bankruptcy court would you file in?

Bankruptcy is filed in federal court, and Florida has three districts. Each court's website has a page for people without a lawyer, and each recommends getting legal advice first.

Federal bankruptcy courts in Florida
CourtWhere it sitsHelp without a lawyer
Northern District of FloridaTallahassee, Pensacola, Gainesville and Panama CityThe court's self-help page (U.S. Bankruptcy Court, N.D. Florida, opens in a new tab)
Middle District of FloridaJacksonville, Orlando, Tampa and Fort MyersThe court's self-help page (U.S. Bankruptcy Court, M.D. Florida, opens in a new tab)
Southern District of FloridaMiami, Fort Lauderdale and West Palm BeachThe court's self-help page (U.S. Bankruptcy Court, S.D. Florida, opens in a new tab)

When is bankruptcy the better choice in Florida?

Often, and we would rather say so plainly. Bankruptcy is a legal right, and for many Floridians it protects more than settlement can. Consider talking to a bankruptcy attorney before anything else if any of these fit you.

  • You are being sued, or your wages or bank account are being garnished. Filing stops most collection actions (11 U.S.C. 362 (Cornell LII, opens in a new tab)).
  • You cannot set aside any money each month. Settlement only works if you can save toward each offer.
  • Most of what you own is protected by Florida exemptions, so Chapter 7 may cost you little property.
  • You are behind on a home or car you want to keep. Chapter 13 can help save a home from foreclosure (U.S. Courts, opens in a new tab).
  • Your debts are large compared with your income, and settling them would take many years of deposits.

We are not attorneys and do not give legal advice. Only a bankruptcy attorney can tell you whether you qualify and what you would keep.

When might settlement fit better?

Settlement can fit when you have a steady income, can save a set amount each month, and are not facing a lawsuit right now. It keeps you out of court and off the public record, and you choose which debts to enroll.

The costs are real. Your credit score will drop during the program, creditors can keep collecting and can sue, fees apply, and forgiven debt may be taxable1. The CFPB (CFPB, opens in a new tab) lists these risks too.

What happens before and after you file?

  1. Before

    Credit counseling

    Take a course from an approved nonprofit agency within 180 days before filing (Cornell LII, opens in a new tab).

  2. Filing

    The petition and fees

    File in your district. Court fees are $338 for Chapter 7 and $313 for Chapter 13, and attorney fees are separate.

  3. After

    Debtor education

    Most people must complete a debtor education course (U.S. Trustee Program (DOJ), opens in a new tab) to receive a discharge.

  4. At the end

    The discharge

    The court order that you no longer owe the debts it covers. Most student loans, certain taxes and support usually are not covered (U.S. Courts, opens in a new tab).

    A fresh start

The federal courts say that seeking the advice of a qualified attorney is strongly recommended (U.S. Courts, opens in a new tab), because bankruptcy has long-term financial and legal outcomes.

What does each option do to your credit?

Both leave a mark. A bankruptcy case can be reported for up to 10 years (Cornell LII, opens in a new tab). Accounts that were charged off or sent to collections, including settled ones, can be reported for seven years from the original delinquency.

The CFPB (CFPB, opens in a new tab) explains how long each kind of negative information can stay, and you can check your reports for free to see what is there.

Where to get legal help

Talk to a bankruptcy attorney first.

We are not a law firm and cannot give legal advice. These are the people who can, many of them free. None of them pays us, and we do not pay them.

Things you should know

The downsides, stated plainly.

Read these before you enroll anywhere, including with us. They apply to every debt settlement program.

  • Your credit score will drop during the program, and late payments stay on your credit report.
  • Creditors may keep collecting while you save, and they can sue. The program does not stop legal action.
  • Interest and late fees can keep adding to your balances until each account settles.
  • Forgiven debt may be taxable income. A creditor may send you IRS Form 1099-C.
  • Fees apply. The fee is a percentage of your enrolled debt, set individually, and charged only after a settlement is reached.
  • Not all creditors agree to settle, and not everyone completes the program.
  • We do not guarantee any amount, percentage or timeline.
  • Debt settlement is not available in all states. We are not a nonprofit or a credit counseling service, and we do not lend money.
  • We do not give legal or tax advice. Talk to an attorney or a tax professional about your situation.

Notes on the figures and claims above

  1. 1Whether an account settles, and for how much, depends on the creditor. Not all debts settle. Your credit score will drop during the program, creditors may sue, and forgiven debt may be taxable. Fees apply.

Straight answers

Florida bankruptcy questions, straight answers.

Rather hear it from a person? 866-659-7966

Can I keep my house if I file bankruptcy in Florida?

Often, yes. Florida protects a homestead with no dollar cap, within its size limits, though a home bought within 1,215 days (about 40 months) of filing has a federal cap. You must also keep up any mortgage. A bankruptcy attorney can check your case.

Can I keep my car in a Florida bankruptcy?

Florida protects up to $5,000 of your interest in one motor vehicle.

Do I qualify for Chapter 7 in Florida?

If your household income is below the Florida median for your household size, the means test is usually not a barrier. Above it, a further test looks at what you could repay. An attorney can run the numbers.

Is debt settlement better than bankruptcy?

Not always. Bankruptcy stops lawsuits and garnishments and can discharge debt without tax, but it stays on your credit report longer. Settlement avoids court but offers no protection. The right answer depends on your income, your property and whether you are being sued.

Sources

Where the facts on this page come from. Each link opens the original in a new tab.

  1. 01 Florida Legislature Fla. Stat. 222.20: Florida residents may not use the federal bankruptcy exemptions (opens in a new tab)
  2. 02 Florida Legislature Florida Constitution, Article X, Section 4: homestead and personal property exemptions (opens in a new tab)
  3. 03 Cornell LII 11 U.S. Code 522: Exemptions (incl. the 1,215-day homestead cap in 522(p), adjusted to $214,000) (opens in a new tab)
  4. 04 Florida Legislature Fla. Stat. 222.25: other exemptions (motor vehicle, personal property if no homestead) (opens in a new tab)
  5. 05 Florida Legislature Fla. Stat. 222.21: exemption of pension and retirement accounts (opens in a new tab)
  6. 06 Florida Legislature Fla. Stat. 222.14: exemption of life insurance cash value and annuity proceeds (opens in a new tab)
  7. 07 Florida Legislature Fla. Stat. 222.11: exemption of wages from garnishment (head of family) (opens in a new tab)
  8. 08 U.S. Trustee Program (DOJ) Census Bureau median family income by family size (cases filed on or after July 15, 2026) (opens in a new tab)
  9. 09 U.S. Courts Chapter 7: Bankruptcy Basics (opens in a new tab)
  10. 10 U.S. Courts Chapter 13: Bankruptcy Basics (opens in a new tab)
  11. 11 U.S. Courts Discharge in Bankruptcy: Bankruptcy Basics (opens in a new tab)
  12. 12 U.S. Courts Filing Without an Attorney (opens in a new tab)
  13. 13 Cornell LII 11 U.S. Code 362: Automatic stay (opens in a new tab)
  14. 14 Cornell LII 11 U.S. Code 109: Who may be a debtor (credit counseling within 180 days before filing) (opens in a new tab)
  15. 15 U.S. Trustee Program (DOJ) Credit Counseling and Debtor Education Information (opens in a new tab)
  16. 16 U.S. Bankruptcy Court, S.D. Florida Clerk's summary of fees (Chapter 7 $338, Chapter 13 $313; revised June 1, 2026) (opens in a new tab)
  17. 17 U.S. Courts Bankruptcy Court Miscellaneous Fee Schedule (opens in a new tab)
  18. 18 U.S. Bankruptcy Court, N.D. Florida Filing without an attorney (Tallahassee, Pensacola, Gainesville, Panama City) (opens in a new tab)
  19. 19 U.S. Bankruptcy Court, M.D. Florida Pro bono and help finding a bankruptcy attorney (opens in a new tab)
  20. 20 U.S. Bankruptcy Court, S.D. Florida Don't have a lawyer? (Miami, Fort Lauderdale, West Palm Beach) (opens in a new tab)
  21. 21 Cornell LII 15 U.S. Code 1681c: Requirements relating to information in consumer reports (10 and 7 year limits) (opens in a new tab)
  22. 22 CFPB What is a debt relief program and how do I know if I should use one? (opens in a new tab)
  23. 23 CFPB How long does information stay on my credit report? (opens in a new tab)
  24. 24 IRS Topic no. 431, Canceled debt: Is it taxable or not? (opens in a new tab)

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  1. 1How much you owea close guess is fine
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