Florida Debt Relief: Your Guide to State Laws and Managing Debt

Like every other state in the nation, Florida and its residents are no strangers to debt and its many implications. Credit card debt seems to be one of the biggest problems in the state, which ranks 13th in the nation when it comes to credit card debt per capita. The same is true for auto debt, as Florida residents have an average of $5,200 in auto loan debt per capita compared to the national average of $4,700.

Fortunately, Florida does offer regulations that can help consumers protect some of their personal property and real estate from creditors. Florida also boasts strong protections for borrowers who take out payday loans.

In this guide, we’ll go over Florida debt statistics and options for consumers who need debt relief in the Sunshine State.

• Debt in Florida: At a glance
• Debt collection in Florida
• Understanding Florida’s statute of limitations
• Florida debt relief programs
• Payday lending laws in Florida
• Tips to tackle debt in Florida
• Filing for bankruptcy in Florida
• The bottom line

Debt in Florida: At a glance

Debt collection in Florida

According to Florida debt collection laws, you cannot go to jail if you don’t pay a debt you owe or a resulting judgment. What can happen, however, is that this information is reported to the three national credit bureaus (Equifax, Experian and TransUnion), resulting in harm to your credit score. Worse, any negative information reported to the credit bureaus can remain on your credit report for up to seven years.

It’s also important to  be aware that the federal Fair Debt Collections Practices Act (FDCPA) protects you against harassment and abusive practices from debt collectors. For example, debt collectors cannot call you before 8 a.m. or after 9 p.m. unless you give them permission. They also cannot misrepresent the amounts you owe, falsely claim you’ll be arrested or threaten you with violence or harm.

If a debt collector is calling you repeatedly, using obscene language, making false statements, threatening you or otherwise mistreating you, you can and should file a formal complaint through the Consumer Financial Protection Bureau (CFPB) here.

If you fail to repay monies you owe and you’ve been part of a lawsuit as a result, a judgment may be entered against you by the Florida courts. At this point, you’ve become a “judgment debtor.” A judgment can last for up to 20 years, meaning the company or person who obtained the judgment against you can try to collect on the debt for that long or until the debt is paid. Interest can accrue on your debt every year based on terms set by the chief financial officer of the state of Florida.

The state also has a process known as “execution,” which allows a creditor to collect money it is owed as the result of a judgment. Execution may involve the seizure of your real or personal property. Florida courts can also require you to submit your income, assets, property information, employer details and Social Security number.

If a judgment is entered against you, you may see your wages garnished or have your bank account seized. However, there are some limits on what can be seized:

• Your home: In the state of Florida, your home is protected from all creditors except those holding a mortgage or lien against your property. As part of Florida’s homestead exemption, you also have the right to exempt your home residence and up to one half-acre of land from having to be sold to repay your debts if you live in an incorporated area, according to the Florida Bar. If you happen to live in an unincorporated area, you can exempt up to 160 acres of property that your home resides on.
• Your vehicle: The state of Florida also allows you to exempt up to $1,000 of your vehicle’s value. Doing so prevents creditors from seizing your vehicle, provided debts owed for the car are less than that amount. If your automobile is seized during an execution and you believe it’s worth less than the value you claimed as exempt, you can ask the court to recognize your exemption and return your vehicle by filing an affidavit with the court and the sheriff in your Florida county.
• Your wages: Florida residents who earn less than $750 per week in net wages and are considered head of household can exempt all their wages from collections. Wages in a bank account that are held by the head of household are also protected from seizure for six months, even if there are funds from other sources in the same account. If you earn more than $750 per week in net wages and agree to have your wages seized to repay your debts, this specific exemption does not apply.A head of household can also protect all of his or her wages by refusing to agree to the garnishment of his or her wages in writing and filing an affidavit with the court. Also note that federal law provides some protection against wage garnishment. Based on federal law, garnishment of your wages cannot exceed “25% of your net wages or the amount that you take home per workweek that is more than 30 times the federal minimum hourly wage, whichever is less,” according to the Florida Bar.

Responding to collections letters

When you begin receiving debt collections letters or phone calls from debt collectors, the first step you should take is validating the debt. According to the CFPB, you should find out:

• Who exactly is contacting you and the name of the company they work for
• The debt collection company’s address and phone number
• The original creditor’s name
• How much you owe
• How you can dispute the debt or confirm it’s actually yours

You can validate a debt by sending a formal letter, and the debt collector has 30 days to respond in writing once you do. During this time, the debt collector must refrain from trying to collect the debt from you.

The CFPB also provides sample letters you can access to confirm a debt is yours, get more information, ask a debt collector to stop contacting you or specify how a debt collector can contact you.

Once you find out all there is to know about the debts being collected, the CFPB recommends acting quickly to minimize damage. If the debt is several years old, the agency suggests determining the statute of limitations for various debts in your state. If the debt is beyond its statute of limitations (the amount of time during which a creditor or debt collector can sue you to collect a specific type of debt), the debt collector may not be able to legally file a lawsuit.

If you’re not sure the debt is yours, you should contact the debt collector to dispute it or ask for more verification. If you are certain the debt being collected is not yours, you should contact the debt collector to inform them the debt does not belong to you and ask them to stop contacting you. On the other hand, if the debt is yours, you should try working with the creditor to settle the debt for less than you owe or to set up a payment plan.

Be cautious about sharing too much of your personal information with debt collectors. After all, you don’t want to give them any more ways to contact you than they already have.

When it comes to dealing with debt collectors, there are some general rules of thumb to follow:

• Try to negotiate a realistic payment plan that you can afford.
• Keep in mind that, if repaying your old debts causes you to get behind on other bills, you could create new problems to deal with.
• Try to negotiate a lump sum payment you could realistically pay to settle your debt once and for all.

Whatever you do, make sure you take written notes of the plan you ultimately agree on. Debt collectors and consumers don’t always remember conversations the same way, so you should always get everything in writing.

If you feel a debt collector is violating your rights, make sure to report them right away. Some organizations that can help you file a formal complaint include:

• Florida Office of the Attorney General
• Federal Trade Commission
• Consumer Financial Protection Bureau

Understanding Florida’s statute of limitations

Florida’s statute of limitations limits the amount of time a creditor or debt collector can sue you to collect a specific type of debt. Once a debt is past the statute of limitations, it becomes time-barred. However, creditors still may attempt to collect on time-barred debts, including filing a lawsuit.

If a creditor does attempt to take legal action to collect a debt after the statute of limitations has passed, you have the right to ask for the case to be dismissed in court. You will need proof of the date of your debt as well as proof that the statute of limitation has passed, however, so make sure to do some research and keep accurate records, if you can.

If a debt has already expired, it’s generally best to leave it alone. A debt collector can no longer successfully sue you for debts that are time-barred and if they try, you can present the statute of limitations as your defense in any lawsuit.

Also note that if you do make a payment on a time-barred debt, you will effectively restart the clock. In that case, the debt collector can once again sue you for repayment of your debt as if the debt were new. They can even sue you for interest and fees that have accumulated along the way, which means you could owe a lot more than you realize. This is yet another reason it’s best to let go of old debts so you can focus on steps that can improve your financial life.

Florida debt relief programs

Struggling with debt is never easy, but there are some programs that can provide relief from certain types of debts and help with living expenses in the state of Florida.

While Florida doesn’t have any state-specific programs aimed at alleviating debt, debt relief programs you may be able to benefit from include:

• ACCESS Florida: This program allows consumers to connect with various public assistance programs in their area, including helping you determine eligibility for food, cash or medical assistance. You can apply for the ACCESS Florida program through the Florida Department of Children and Families.
• Temporary Assistance for Needy Families (TANF): Florida’s TANF program provides cash assistance to needy families who meet specific guidelines. Cash payouts depend on family size, hours worked, countable assets and other factors. Money received can be used to pay for things such as housing, food, debt repayment and more.

Also keep in mind that there are national debt relief companies that may be able to work with you to find a solution to your financial problems. Companies like Freedom Debt Relief, CuraDebt and Premier Debt Help can negotiate with creditors on your behalf to reduce the debt you owe. Typically, this process requires you to stop making payments toward your debts in favor of making payments to an escrow account. The debt relief company you’re working with will handle your payments and use your funds to negotiate a settlement.

Keep in mind, however, that debt relief isn’t for everyone. First, debt relief companies cannot do anything for you that you cannot do yourself. Stopping payment on your bills can also cause massive damage to your credit score, and don’t forget that debt settlement companies charge fees for their services. Finally, there are no guarantees with debt settlement programs since creditors are not legally bound to working with them to negotiate your debt down.

Also be careful about falling for debt relief traps and scams that aim to profit off your pain. Most debt relief scams charge customers a large upfront fee, but ultimately fail to get meaningful amounts of debt discharged or help the consumer save any money.

Payday lending laws in Florida

Payday lenders provide short-term loans that are repaid with the borrower’s paycheck, as well as a hefty fee. With this type of loan, the payday lender agrees to hold a check for a specific period of time before depositing it on a date both parties agree upon (usually two weeks).

While getting paid early via a payday loan may seem like a good idea, these loans tend to be some of the most expensive out there. Interest rates on payday loans can be as high as a 400% annual percentage rate (APR) and potentially more, so we never recommend taking this type of loan out, no matter how dire your financial situation becomes.

Fortunately, the state of Florida does offer some consumer protections for borrowers who take out payday loans. These protections include:

• Maximum loan amount: $500
• Maximum fee: 10% of the amount borrowed, plus a verification fee of $5
• Loan term: At least seven days and no more than 31 days

A borrower may only take out one payday loan at a time. It is required for the borrower to pay off their first payday loan and wait 24 hours before taking out another one.

If the borrower is unable to pay off his or her payday loan, the lender must offer a 60-day grace period with no additional charges. To qualify for the 60-day grace period, the borrower must make an appointment with an approved counseling service within seven days and complete the counseling within the 60-day grace period.

Tips to tackle debt in Florida

There are numerous ways to deal with debt on your own. Paying off debt may not be an easy feat, but there are plenty of financial products and strategies that can help.

Consolidate your debt

If you have multiple debts with different interest rates and monthly payments, it may be smart to consolidate your debts into a new loan with one monthly payment. Doing so can help you simplify your financial life, and you may save money on interest, if your credit score is good enough to secure a lower interest rate.

Personal loans can be a smart option for debt consolidation because they come with a fixed interest rate, a fixed monthly payment and a fixed repayment timeline. You can use a personal loan to consolidate credit card debt, medical debt and other loans, and then make just one payment each month until all your debts are paid off.

To qualify for a personal loan, you typically need a good credit score, stable employment history and solid history of repayment. If you have poor credit or no credit, you may be able to qualify for a personal loan with a cosigner.

Refinance your debts

You may also want to consider refinancing some of your debts, specifically mortgage debt, student loan debt and auto loan debt. With a refinance, you would take out a new loan that replaces your old one, usually because you qualify for a better deal in some way. Refinancing these secured debts into a new loan could help you save with a lower interest rate or a lower monthly payment that is easier to handle.

While refinancing your debts may help you secure a lower interest rate or lower monthly payment, keep in mind that you may also need to extend your repayment period, meaning you’ll pay on your debts for a longer stretch of time. If you have 20 years left on a 30-year mortgage and you refinance into a new 30-year fixed-rate loan, for example, you’re essentially adding 10 more years to your debt repayment timeline.

Also note that refinancing federal student loans with a private lender can also have consequences. Specifically, you’ll lose out on federal protections like deferment, forbearance and income-driven repayment plans when you refinance federal student loans with a private company.

Use a balance transfer card

If you have credit card debt or several small loans to consolidate, you can also consider applying for a balance transfer card. These cards often come with 0% APR for an introductory period that typically lasts 12 to 21 months. However, you need a good credit score to qualify. A balance transfer card can make it easier to pay down debt faster because your entire payment will go toward the principal of your balance during your introductory offer.

Balance transfer cards work well for consumers who are paying high interest rates and more than a few monthly payments each month. Keep in mind, however, that some balance transfer cards charge an upfront balance transfer fee to get started — usually 3% to 5%. Lastly, be sure you’re in a place where you can pay off the debt before the promotional period ends. Otherwise, you may end up being hit with a higher rate and owe more than you originally would have.

Filing for bankruptcy in Florida

In some cases, it may make sense to file for bankruptcy. For example, you may have so much debt that you could never pay it back with your current income, or you may just need help reorganizing your debts in a way that can help you pay them off over time. Filing for bankruptcy can help you discharge all or some of your debts while stopping creditors from continuing their collection efforts. There are two main types of consumer bankruptcy to consider: Chapter 7 and Chapter 13.

Chapter 7 bankruptcy is frequently called “liquidation bankruptcy,” because it requires the consumer to liquidate or sell some of their assets to pay off their debts. Once Chapter 7 bankruptcy is complete, you’ll receive full relief of qualified debts (not including most student loans, child support, most tax debts, alimony and court or criminal fines).

Chapter 13 bankruptcy requires consumers to reorganize their debts and repay them according to a payment plan based on future income. You typically make payments on your debts for three to five years before the court discharges your remaining debts.

While bankruptcy can help you discharge all or some of your debts, keep in mind that there are some real consequences to consider. For example, you could lose your home, your car, or other assets depending on the type of bankruptcy you file for. Bankruptcy can also be a long and costly process, taking months to complete and costing thousands of dollars along the way.

Bankruptcy can also hurt your credit score, making it more difficult to rent an apartment or qualify for other types of credit in the future. Also note that your bankruptcy will be made public, which could tarnish your professional image or make you feel vulnerable at the very least. Your auto insurance premiums can also become more costly after bankruptcy, and you may pay higher fees and more interest when you are able to borrow money in the future. Finally, you can’t discharge all types of debt in bankruptcy. Student loans, for example, are rarely able to be discharged outside of certain exceptions.

Before you file for bankruptcy in order to get debt relief, it’s important to understand its costs and consequences. The following resources can help you learn more:

• Consumer Bankruptcy in Florida, the Florida Bar
• Debt Relief or Bankruptcy? Federal Trade Commission (FTC)
• Florida Department of Elder Affairs

The bottom line

Florida debt relief comes in many forms, but it’s up to you to determine which type of relief to pursue. You may find that bankruptcy is the only way out of your current financial situation, but it’s also possible that debt consolidation or a balance transfer card could help. Make sure to consider all your options, including the pros and cons, before you move forward.

The information in this article is accurate as of the date of publishing.