Discover How Florida Bankruptcy Laws Can Protect Your Business, Your Assets, and Your Future

Let’s face it—running a business in Florida isn’t always sunshine and smooth sailing. From hurricanes and housing downturns to rising costs and unexpected lawsuits, business owners across the Sunshine State are no strangers to financial stress. If you’re at a point where the numbers just aren’t adding up, bankruptcy might be the lifeline your business needs—not a death sentence.

At DuFault Law, based in Naples and serving all of Florida, we help businesses understand how to navigate bankruptcy strategically and legally. Whether you’re a contractor in Jacksonville, a boutique owner in Tampa, or a restaurant group in Miami, this guide will give you a clear, confident understanding of what happens during bankruptcy in Florida.

Bankruptcy: A Legal Tool—Not a Failure

Before we dive in, let’s shift the mindset: Bankruptcy isn’t a personal or professional failure. It’s a legal tool designed to help you either start over or reorganize so you can recover and rebuild.

n fact, Florida consistently ranks among the top 5 states for bankruptcy filings. In 2023 alone, more than 33,000 bankruptcies were filed in Florida, with a significant number of those involving businesses. So, if you’re thinking about it, you’re far from alone—and you’re definitely not out of options.

Types of Business Bankruptcy in Florida

Not all bankruptcies are created equal. Here’s a breakdown of the most relevant types for Florida-based business owners:

Chapter 7 – Business Liquidation: This is the most common form of bankruptcy for small businesses in Florida looking to shut down operations.

• A court-appointed trustee sells off business assets.
• Proceeds are distributed to creditors.
• Once complete, debts are discharged and the business is dissolved.

Florida Insight: Florida’s generous exemption laws (especially for sole proprietors) may allow some personal assets—like your primary residence—to remain untouched under the state’s homestead exemption.

Chapter 11 – Business Reorganization: Think of Chapter 11 as a reboot instead of a shutdown.

• You propose a reorganization plan to restructure debts.
• You continue running your business during the process.
• You work with creditors and the court to repay what you can over time.

Why this matters in Florida: Many real estate firms, construction companies, and restaurants use Chapter 11 to overcome cash flow challenges while staying in business.

Subchapter V (a streamlined Chapter 11) is available for small businesses with less than ~$7.5 million in debt, offering faster timelines and lower costs.

Chapter 13 – Debt Adjustment for Sole Proprietors: If your business is not incorporated, you may file under Chapter 13 as an individual.

• You keep your assets and pay debts through a 3–5 year repayment plan.
• Especially helpful for sole proprietors with steady income but overwhelming debt.

Important in Florida: Chapter 13 can help protect your home under Florida’s robust homestead exemption laws, even while reorganizing your business debts.

What Happens During a Florida Bankruptcy Proceeding?

STEP 1: Initial Consultation & Financial Review

You sit down with an experienced Florida business bankruptcy attorney (👋 hey, that’s us) to:

• Review your financials
• Discuss your goals (shut down or reorganize?)
• Evaluate your personal and business liability

STEP 2: Filing the Bankruptcy Petition

Your attorney files your case with the appropriate Florida U.S. Bankruptcy Court. Florida has three federal districts: Northern, Middle, and Southern. The filing must include:

• Business financial statements
• A list of debts, assets, income, and expenses
• Recent tax returns

STEP 3: Automatic Stay

The moment you file, the court issues an automatic stay, which:

• Stops creditors from calling
• Halts lawsuits and foreclosures
• Suspends evictions or repossessions

This legal pause is often the biggest immediate relief for Florida business owners.

STEP 4: Trustee Appointment & 341 Meeting

A trustee is assigned to your case. You’ll attend a 341 Meeting of Creditors, usually held virtually or in a federal building. It’s a short, non-adversarial meeting where you answer basic financial questions under oath.

STEP 5: Debt Resolution / Discharge / Reorganization Plan

• Chapter 7: Trustee sells assets, and remaining debts are discharged.
• Chapter 11/13: You work with your attorney and the court to approve a payment plan.

STEP 6: Case Closed—Recovery Begins

Once your case is resolved, your business either:

• Closes (Chapter 7)
• Continues under new terms (Chapter 11/13)

Now you’re back in control—with fewer liabilities weighing you down.

Mistakes to Avoid in Florida Business Bankruptcies

Florida’s laws offer unique advantages, but they also come with pitfalls. Watch out for:

• Transferring property before filing (this can be reversed by the court)
• Mixing personal and business accounts
• Ignoring creditor lawsuits (they don’t go away on their own)
• Going it alone without an attorney (Florida bankruptcy law is nuanced and procedural)

Real-World Example: Florida Construction Company Turns Around

A mid-sized construction firm in Orlando was facing multiple lawsuits due to project delays and material shortages. With creditors closing in, they filed under Subchapter V of Chapter 11, allowing them to:

• Pause creditor actions
• Renegotiate contracts
• Continue operations while repaying a portion of debts

With a strong legal team and court approval, the business was able to restructure and is now profitable again.

Who Should Consider Business Bankruptcy in Florida?

• Contractors hit by payment disputes or liens
• Retailers impacted by real estate costs or low foot traffic
• Hospitality businesses hurt by hurricanes or tourism downturns
• Real estate investors with overleveraged portfolios
• Small business owners juggling PPP loan repayment issues

DuFault Law: Florida Business Bankruptcy Attorneys You Can Trust

We’re more than just lawyers—we’re business advisors, problem solvers, and your legal partner in financial recovery. Based in Naples, we help businesses across Florida understand their options and navigate bankruptcy with confidence.

Call us today at (239) 422-6400 or email us at contact@dufaultlaw.com to schedule a consultation. Let’s talk about how to protect your business, your assets, and your peace of mind.