Chapter 7 Bankruptcy in Miami, Florida

Chapter 7 bankruptcy is a court-supervised process under federal law that eliminates most unsecured debts in approximately four to six months. For most Miami filers, it is the fastest and least expensive path to a financial fresh start. Credit-card balances, medical bills, personal loans, deficiency balances on repossessed cars, old utility accounts, and most civil judgments are discharged at the end of the case – meaning the law forbids the creditor from ever trying to collect them again.

Because Florida's exemption laws are unusually generous, most of our Chapter 7 clients keep all of their property, including their home, their cars, their retirement accounts, and their household goods.

Who Qualifies for Chapter 7 in Florida

To file Chapter 7, an individual must satisfy two main requirements:

1. Pass the means test. The means test compares the filer's household income to the Florida median family income for the same household size. If income is below the median, the filer is presumed to qualify. If income is above the median, the filer must complete the second part of the means test, which subtracts allowed expenses to determine "disposable income." See our page on the Florida means test for a detailed explanation.
2. Complete a credit-counseling course from an approved provider within 180 days before filing. The course can be completed online and typically costs $10 to $50.

A filer must also not have received a Chapter 7 discharge within the last 8 years or a Chapter 13 discharge within the last 6 years.

What Chapter 7 Discharges – and What It Does Not

A Chapter 7 discharge eliminates personal liability for most unsecured debts, including:

• Credit-card debt
• Medical bills
• Personal loans (signature loans, payday loans)
• Deficiency balances after foreclosure or vehicle repossession
• Old utility and cell-phone accounts
• Most lawsuits and money judgments
• Older income tax liabilities that meet specific timing tests (see tax debt and bankruptcy)

Certain debts are non-dischargeable as a matter of law and survive a Chapter 7 case:

• Domestic support obligations (alimony, child support)
• Most student loans (with narrow exceptions for undue hardship)
• Recent income taxes, tax fraud, and trust-fund payroll taxes
• Debts for personal injury caused by DUI
• Criminal restitution and most government fines
• Debts not listed on the schedules in an asset case
• Debts incurred through fraud, false pretenses, or willful and malicious injury, if the creditor objects and prevails

What Happens to Secured Debts

A discharge eliminates personal liability on the debt, but it does not by itself remove a lien. If you owe money on a house or a car and want to keep the property, you generally have three options:

• Reaffirm the debt – sign a new agreement keeping the loan in place after the bankruptcy
• Redeem the property – pay the lender the current fair market value of the collateral in a lump sum
• Surrender the property and walk away with no further obligation

Many Florida courts also allow "ride-through" on real estate – you continue making payments without signing a reaffirmation, the lien remains, but personal liability is discharged. We walk through the right choice for your car and your house at the consultation. See our page on reaffirmation agreements for a full discussion.

What Happens to Your Property

The Chapter 7 trustee's job is to identify any property that is not protected by an exemption and liquidate it for the benefit of unsecured creditors. In a typical Miami consumer case, the trustee finds nothing to sell because Florida exemptions cover everything. The relevant exemptions include:

• Homestead – unlimited equity in your primary residence, subject to acreage limits (see the Florida homestead exemption)
• Personal property – $1,000 per person, plus an additional $4,000 per person if no homestead exemption is claimed
• Motor vehicle – $1,000 of equity per debtor (a married couple filing jointly gets $2,000)
• Retirement accounts – ERISA-qualified plans and IRAs are fully protected with very few exceptions
• Wages of head of family – up to $750 per week or the full amount in a single deposit period
• Tools of the trade, prescribed health aids, life insurance proceeds, and a number of other categories

For a fuller list, see our page on Florida bankruptcy exemptions.

The Chapter 7 Timeline

A typical no-asset Chapter 7 case looks like this:

• Day 0: Petition and schedules filed; automatic stay takes effect immediately, stopping foreclosures, garnishments, lawsuits, and collection calls
• Day 21-40: 341 meeting of creditors (held by video conference for most Miami cases since 2020)
• Day 60 (after the 341): Deadline for creditors to object to discharge or dischargeability
• Day 75-100: Discharge order entered by the court
• Shortly thereafter: Case closes

Where Cases Are Filed in South Florida

Chapter 7 cases for Miami-Dade residents are filed in the U.S. Bankruptcy Court for the Southern District of Florida, Miami Division. Broward residents file in the Fort Lauderdale Division, and Palm Beach County residents file in the West Palm Beach Division. We appear in all three.

Common Reasons Chapter 7 Is the Right Tool

• You have substantial unsecured debt and no real ability to pay it back over the next several years
• Your household income is at or below the Florida median for your family size
• You do not have non-exempt assets that you are unwilling to lose
• You are not behind on a mortgage you want to save (Chapter 13 is generally better for that)
• You want the fastest possible discharge

The Means Test in Detail

The means test is the gatekeeping calculation for Chapter 7 eligibility. It runs in two stages. The first stage compares the filer's current monthly income – the six-month average of all household income, annualized – against the Florida median for the same household size. If income is below the median, the filer is presumed eligible for Chapter 7 and the analysis ends. If income is above the median, the second stage applies.

The second stage subtracts allowable expenses from current monthly income and produces a number called monthly disposable income. The allowable expenses are not the debtor's actual expenses – they are the IRS Local and National Standards for the debtor's household size and the county of residence, with certain actual expenses (taxes, mandatory payroll deductions, health insurance, child care, secured debt payments on retained collateral) also allowed. If monthly disposable income multiplied by 60 exceeds $9,075 (and certain other thresholds), the presumption of abuse arises under 11 U.S.C. § 707(b) and the case will typically be converted to Chapter 13 or dismissed unless special circumstances justify the filing.

The United States Trustee monitors above-median Chapter 7 cases closely and routinely files motions to dismiss or convert under § 707(b) when the numbers warrant. For above-median filers, the means test calculation is often the most important number in the case. See our Florida means test page for the detailed mechanics.

Florida Exemptions and the 730-Day Residency Rule

Florida's generous exemption framework – particularly the unlimited homestead exemption – is only available to debtors who have been Florida domiciled for the 730 days (two years) before filing. Under 11 U.S.C. § 522(b)(3), a debtor who lived in Florida less than 730 days must use the exemptions of the state where they lived for the majority of the 180-day period preceding the 730 days. This trips up clients who recently moved to Miami from New York, New Jersey, or California – their bankruptcy filing in Florida may have to apply New York's or California's exemptions, which are much less generous. Timing a filing past the 730-day mark can produce dramatically better results, and we run that analysis at the consultation.

Florida also imposes a separate 1,215-day rule on the homestead specifically: equity in a homestead acquired within 1,215 days (about 3 years and 4 months) before filing is capped at approximately $189,050 (adjusted periodically). The full unlimited Florida homestead is available only to filers who have owned the homestead for more than 1,215 days, or whose equity was rolled over from a prior Florida homestead within that window.

Pre-Filing Planning – And What Not to Do

The months before a Chapter 7 filing are a time for careful, lawful planning – and for avoiding moves that can blow up an otherwise clean case. The most damaging mistakes:

• Paying back a relative or business partner. Payments to an “insider” in the one year before filing are recoverable by the trustee as a preference under § 547(b). Paying mom back $15,000 from a tax refund six months before filing means the trustee will sue mom for that $15,000 after the case opens.
• Paying a single non-insider creditor more than $600 in the 90 days before filing. The trustee can recover the payment as a preference. The recovered funds go into the estate and are distributed to all unsecured creditors pro-rata.
• Transferring property to a relative. Transfers within two years (or longer under state fraudulent-transfer law) can be undone by the trustee as fraudulent transfers under § 548 and Florida's Uniform Voidable Transactions Act. A house signed over to an adult child for “estate planning” in the year before filing is a textbook problem.
• Maxing out credit cards on cash advances or luxury goods. Section 523(a)(2)(C) creates a presumption of nondischargeability for cash advances over a threshold ($1,100 currently) within 70 days of filing, and for charges of luxury goods over a threshold ($800) within 90 days. Last-minute spending sprees produce non-dischargeable debt.
• Moving money from non-exempt to exempt assets without disclosure. Converting a non-exempt brokerage account into exempt annuities or retirement contributions in the months before filing can be characterized as fraudulent exemption planning depending on the facts. Some conversion is legal, much is not, and the line is fact-specific.
• Selling assets at less than fair value. A car “sold” to a sibling for $1,000 when its value is $8,000 is a constructive fraudulent transfer.
• Cashing out retirement accounts. Retirement money is exempt. Cashing it out converts protected funds into reachable funds and produces tax penalties.

The right pre-filing approach is the opposite: stop using credit cards, stop making non-required payments to anyone, keep regular ongoing mortgage and car payments, file all overdue tax returns, gather six months of pay stubs and bank statements, and adjust withholding so a large tax refund does not exist on the petition date. The consultation is when we map out what to do and what to avoid for the months leading up to filing.

Attorney Fees and Pro Se Filings

Chapter 7 attorney fees in the Southern District of Florida vary by firm and by case complexity. Simple no-asset consumer cases are typically in the $1,500-$2,500 range plus the $338 filing fee, plus credit counseling and debtor education courses (about $50 combined). Cases with above-median income, business income, real estate transfers, or adversary proceedings cost more. Most firms require the attorney fee paid in full before filing, because attorney fees for pre-petition work are themselves dischargeable in the case. Filing pro se is doable for a very simple no-asset case but is risky in any case with property, business interests, or prior transfers. The court will waive the filing fee on a showing of financial need (Form 103B).

Schedule a Consultation

If you are considering Chapter 7, call 786-522-1411 to speak directly with attorney Albert Goodwin. We will look at your income, your debts, and your assets and tell you honestly whether Chapter 7 is the right tool for your situation, what the realistic cost will be, and what the timeline looks like.