Chapter 7 vs. Chapter 13 Bankruptcy
Which Is Right for You in St. Augustine?
If debt has become unmanageable and collection calls are a daily event, bankruptcy may be the fastest path back to stable ground. For most St. Johns County residents, the decision comes down to two options: Chapter 7 and Chapter 13. Both are filed in the Jacksonville Division of the U.S. Bankruptcy Court for the Middle District of Florida, but they work very differently and suit very different situations.
How Chapter 7 Works
Chapter 7 is often called liquidation bankruptcy, but that label scares people more than it should. In a Chapter 7 case, a trustee reviews your assets, sells anything that is not protected by an exemption, and uses the proceeds to pay creditors. Whatever qualifying debt remains is discharged, meaning you no longer owe it. Most Chapter 7 cases in the St. Augustine area close within four to six months.
Florida has some of the most generous exemptions in the country. The homestead exemption can protect the full value of your primary residence on up to half an acre inside a municipality or 160 acres outside city limits, provided you meet residency requirements. Retirement accounts, a portion of vehicle equity, and personal property are also protected. In practice, many Chapter 7 filers keep everything they own.
To qualify, you must pass the means test, which compares your household income to the Florida median. If your income is above the median, you may still qualify after deducting allowed expenses, but it requires careful analysis.
How Chapter 13 Works
Chapter 13 is a reorganization. Instead of liquidating assets, you propose a repayment plan lasting three to five years. You make one monthly payment to the trustee, who distributes it to creditors according to the plan. At the end, remaining eligible unsecured debt is discharged.
Chapter 13 is the better tool when you are behind on a mortgage or car loan and want to keep the property. The plan lets you catch up on arrears over time while the automatic stay stops foreclosure and repossession. It is also the only option for filers who fail the means test, and it can protect non-exempt assets that would be at risk in Chapter 7.
Which One Fits Your Situation?
A few general patterns hold true in our St. Augustine practice:
- Mostly credit card and medical debt, modest income, and exempt assets usually point toward Chapter 7.
- Mortgage arrears, a second mortgage that could be stripped, or income above the median usually point toward Chapter 13.
- Recent tax debt, a prior bankruptcy discharge, or co-signed loans can shift the answer in either direction.
The right choice depends on your income, your property, the types of debt you carry, and your goals. That is why the first step is a detailed review of your full financial picture, not a guess based on a checklist.
Talk to a St. Augustine Bankruptcy Lawyer
Albaugh Law Firm has helped thousands of North Florida clients find relief from debt. Founding attorney Ryan Albaugh is a former prosecutor and experienced trial lawyer who has handled bankruptcy, foreclosure defense, and consumer matters for nearly two decades. From our St. Augustine office on Plantation Island Drive, we serve St. Johns, Flagler, and Putnam counties. Call 904-471-3434 or visit our St. Augustine bankruptcy lawyer page to schedule a free, confidential consultation.
