rights are rights guaranteed by Florida law for persons who borrow or
owe money on credit. These rights protect
debtors from being treated unfairly by creditors. Everyone is a debtor. If you have a car loan, telephone service, a
mortgage on your home, credit cards, etc., you are a debtor. If you get
behind in your payments you may be sued or contacted by a debt
collector or collection agency. If you are sued
and the creditor wins the case, a judgment will be entered against you
by a judge at the end of the lawsuit. This
information can be reported to a credit bureau. The
credit bureau can report this information for seven years in your
may obtain a free credit report to see what information has been
reported against you by contacting the following websites:
– online consumer guide
– one free yearly report from Equifax,
Experian and Transunion
search the internet to locate other websites for free credit reports.
If you do
not think you owe a debt shown on your credit report, or if some of the
information is wrong, you need to contact the credit bureau, in
writing, describing the debt or portion of debt that you believe to be
wrong. Some examples of disputes of debts are: You do not owe the debt at all or the amount
shown; The debt has been paid; You are a victim of identity theft; or the debt is barred due
to statutory time limitations.
If you do
not get a response from the credit bureau within 30 days, you should
write or call them again. If you are not
satisfied with the credit bureau’s reply, you may contact the creditor
directly to correct the information shown in the credit report. You can
always try to work out your debt with the creditor.
If you are able to make a payment on your debt, the
creditor may be more willing to work something out.
However, if the debt is large and you cannot guarantee to
make regular payments, the creditor may not work with you.
Also remember that a creditor may write off a debt at any
is no guarantee that you will be approved when applying for credit. Some reasons for being denied are: not meeting minimum income requirement; you
already have too large of a debt balance; not living at your residence
or working at your job long enough; or a bad or incorrect
credit report. If you are denied credit,
the creditor must advise why. The creditor
must give you the opportunity to ask for an explanation so long as you
ask within 60 days of the denial.
bills may even affect your credit. Even if
you have health insurance there may be a few months between the
submission of the bill to the insurance company and their payment of
the bill, during which time the creditor may report the unpaid debt to
the credit bureau. This is another reason
to check your credit report. frequently.
If you have
unpaid medical bills reported on your credit report, you may either pay
the bills, notify the credit bureau of a pending insurance payment, or
write a letter to the credit bureau explaining the delay in payment of
the bill. How unpaid medical
bills affects your credit varies with each creditor.
Some creditors may consider you a high credit risk while
others may not put as much importance on the unpaid medical bills.
ON A LOAN
cosigning on a loan for anyone, including your son or daughter, you may
want to consider the effect on your credit if the primary borrower does
not pay the debt. If not paid, the
creditor will look to you to pay the debt, including late fees and
collection costs. The creditor may use the
same collection methods against you as they would the primary borrower. This could end up ruining your good credit. Creditors must give you notice at the time of
cosigning the loan explaining all of your obligations as a cosigner. Be sure you read it thoroughly.
In addition to putting your credit at risk, it may reduce
your ability to obtain loans as it raises your outstanding debt balance.
If you have
a student loan and find you cannot make the payments, you might
consider having the payments postponed through forbearance or deferment. Forbearance is a postponement by which the
bank or agency that guaranteed the loan allows you to stop making
payments for a certain period of time. Forbearance
applies only to the principal. The
interest will continue to accrue. Deferment
is the postponement of payments for a certain length of time, such as a
period of unemployment or for the purpose of going back to school. You cannot receive deferment if you have
defaulted on the loan. You may also check
into loan cancellation with the bank or agency that guaranteed your
DEBTOR’S RIGHTS IN A LAWSUIT
If you are
sued for money in Florida , the suit will either be filed in Small
Claims Court, County Court or Circuit Court. Cases
in Small Claims Court are for amounts up to $5,000.00.
County Court is for cases with amounts from $5,001.00 to
$15,000.00. Circuit Court cases are for
amounts in excess of $15,000.00. The
person bringing the lawsuit is called the “Plaintiff” and the person
being sued is called the “Defendant”.
suit is filed, you will be served with a Summons and Complaint. Service may be either by Deputy Sheriff or by
Certified Mail. Read the Complaint
thoroughly so you know what you are being sued for. It is important
that you respond to the Complaint within 20 days of your being served
by either immediately contacting an attorney who will answer the
complaint, or answering the lawsuit yourself. If
the Complaint is not answered within the 20 days, the Plaintiff can
have the Clerk of Court enter a Default against you and they can
proceed to get a Judgment against you.
If you do
not hire an attorney to represent you, you may wish to do your
answer the Complaint, the following is a guide as to what the Answer
should include. This is not legal advice,
and you should not rely on it.
1. At the top of the Answer, complete the Caption
by typing or writing in ink the name and title of the court, the
Plaintiff’s name, the Case Number, and your name as the Defendant, as
well as any other Defendants.
2. Type or write in ink the word ANSWER, which
should be centered right below the caption.
3. Beginning with the first paragraph of the
Plaintiff’s Complaint, start saying what you agree with or disagree
with. In other words, if you agree with a
paragraph say: “I admit paragraph 1.” Or, if you disagree with a paragraph say: “I deny paragraph 2”., and then give the
reason why you disagree with that paragraph. Be
sure you answer all of the paragraphs in the Complaint.
4. If you believe the Plaintiff owes you money,
you may add a Counterclaim to your Answer. If
you are going to do this, be sure and type or write in ink the heading
COUNTERCLAIM, which should be centered below the answer portion. Be sure you state in numbered paragraphs what
they owe and why.
5. At the bottom of the Answer, and Counterclaim
if applicable, you must write in the date you sign the Answer, and
Counterclaim if applicable, sign your name, and write or type in your
address and telephone number. In addition,
write or type a statement saying that you have delivered a copy to the
Plaintiff or Plaintiff’s attorney, if any.
file the original Answer with the Clerk of Court in the county where
the lawsuit was filed. Be sure you deliver
a copy of your Answer to Plaintiff or Plaintiff’s attorney, if any,
immediately after filing the original with the Clerk and keep a copy
for your records.
If you do
not answer the Complaint within the 20 day period, and a DEFAULT has not
been entered against you by the Clerk of Court, you should
immediately file and serve an Answer as explained above.
filing your Answer and if you do not settle with the Plaintiff, a trial
will be set by the Court. If the case is
filed in Circuit Court, there may be pre-trial procedures or motions
that need to be done or filed. The Court
will inform you upon your request for information.
If you lose
the lawsuit, a judgment will be entered against you.
The Plaintiff who has won a judgment is called a “judgment
creditor” and the Defendant who has lost and had a judgment entered
against him/her is called a “judgment debtor”. The
judgment creditor has ten years to collect on the judgment, and may
renew the judgment for one more ten-year period.
obtaining a judgment, and in order to find out whether you work, where
you keep your money, or what property you own, the judgment creditor
may require you to complete a Fact Information Sheet or participate in
a discovery in aid of execution. If you do
not supply this information, the judgment creditor can require you to
come to court to supply the information. If
you do not appear at the court hearing or refuse to supply the
information, you may be subject to contempt of court proceedings.
judgment creditor can collect on a judgment by levy, garnishment of
bank accounts, or garnishment of wages.
judgment creditor obtains a writ of garnishment or continuing writ of
garnishment, he/she must send you a copy of the Writ, a copy of the
answer filed by your employer or bank, and a notice telling you about
your right to request that the court stop the garnishment or execution.
creditor may not garnish your wages or your bank accounts without a
certain kinds of property that are exempt and cannot be taken by a
judgment creditor. Some of this property
is not exempt when the judgment is for child support or taxes. Some exempt property is as follows:
1. Welfare, Supplemental Security Income (SSI),
Social Security, Disability, Unemployment Compensation, and some
pensions and retirement benefits;
2. Net wages of $154.50 per week, or 75% of your
net wages, whichever is more; and in the case of the head of a
household, wages up to $750.00 per week;
3. Your vehicle up to $1,000.00 of its value
(being the value of the vehicle less all debts for which the vehicle is
4. Personal property up to $1,000.00 value (this
can include money held in a bank account);
5. Equity in a home up to ½ acre of land if
located in an incorporated area (city) and up to 160 acres in an
unincorporated area (county), which includes a mobile home or modular
home so long as you own the land it is located on; and
6. Professionally prescribed health aids used by
you or your dependents.
are creditors who have loaned you money on your personal property or
vehicle, workers who have worked on your home, or a lender who has
loaned you money on your home and secured creditors.
claim your exemptions or exempt property by filing a Claim of Exemption
with the court describing the exemption and requesting a hearing before
a judge. You must send a copy of the Claim
of Exemption to the judgment creditor or their attorney, if any. The judgment creditor must then file an
affidavit or reply with the court within two days if they wish to
challenge your exemption. The court will
set a hearing on the matter and forward notice to you of such hearing.
Contact us here at FHS for these forms.
wages or bank accounts are going to be garnished, you will not receive
any notice until after the wages have already been withheld or a hold
has been placed on your bank accounts. Therefore,
it is important that you complete and file the Claim of Exemption as
soon as possible so the court can set a hearing. However,
do not file the Claim of Exemption before your wages are withheld or
before a hold is placed on your bank accounts as the court cannot set a
hearing prior to garnishment.
or any other person, that is not a defendant along with you and who has
an ownership interest in any bank accounts or property, may file an
affidavit showing their ownership of the accounts or property and
request the court to return the accounts or property to them.
accounts may lose their exempt status if they are fraudulently
transferred to someone else.
personal property shall be subject to levy and sale under an Execution
issued by the Clerk of Court after judgment is entered by the Court,
unless they are determined to be exempt property as described above.
judgment has been obtained against you, and in order to protect your
homestead from forced sale, or levy, you must designate it as your homestead. This
statement must be signed by you, dated, and recorded in the public
records of the county where the homestead property is located.
If you have
a contract to sell your homestead property or if you have a commitment
from a lender for a mortgage on your homestead property, you must file
a “notice of homestead”. It would then be up to the
judgment lienor or judgment creditor to bring an action for a
declaratory judgment to have the constitutional homestead status
determined by the court. The notice of
homestead does not apply to judgments or liens for real property taxes,
labor, services or materials furnished to repair or improve real
property or any liens or judgments for other obligations contracted for
house, field, or other labor performed on the real property.
person other than you, who is not a defendant along with you, claims
any property levied on, he or she may obtain possession of the property
by filing an affidavit with the officer serving the Execution that the
property belongs to him or her and by supplying said officer with a
bond with surety in favor of plaintiff in double the value of the goods
is made upon lands that have not yet been set aside as homestead, the
defendant may notify the officer making the levy by written notice
under oath that the lands are his or her homestead and giving a
description of said land. This may be done
any time before the day of the sale.
is made against personal property, the defendant may make an inventory
of the personal property, designating which personal property is exempt. This must be done within 15 days after the
date of the levy. Check F. S. 222.061 in
your county law library or on the internet at www.flsenate.gov/Statutes/index
for details on this procedure.
exception to levying on property without a court order is personal
property, such as a car, that has been put up as collateral or security
for a loan, which may be taken through repossession.
A creditor may repossess your property without going to
court first. However, a creditor may not
force his way into your home, your garage, or gated property that is
locked to take possession of the property without a court order.
collection agency or debt collector is any agency or person other than
a person directly employed by the creditor or judgment creditor who
regularly collects debts owed to others. Attorneys
who collect debts for creditors are also “debt collectors”.
collectors must follow certain guidelines and debtors should be treated
fairly. Collection agencies and debt
collectors are regulated by both state and federal laws.
However, the laws do not eliminate debts that are owed.
collection agency or debt collector may contact you by mail, telephone
or personal visit so long as it is at reasonable times and at a
reasonable place. They may not contact you
at work if they know your employer disapproves. In
addition, they may not contact your employer unless they have written
consent from you.
contact you in writing regarding the debt they are attempting to
collect, they must provide you with their name and address, the amount
of the debt, the name of the creditor they are collecting for, a
statement that unless you dispute the debt within 30 days after you
receive the notice they assume the debt is correct, and a statement
that if you notify the collection agency or debt collector within 30
days of receiving notice that you dispute the debt, the collection
agency or debt collector will verify the debt and mail such
verification to you.
contact you by telephone, you may insist that they also contact you in
writing. They may contact you by telephone
between the hours of 8:00 a.m. and 9:00 p.m. They
cannot speak to you or your spouse more than 3 times in one week.
If you do
not believe you owe the debt, then within 30 days of the first contact
by the collection agency or debt collector, you must advise them in
writing, by certified mail so you have a record, that you disagree with
the entire debt or describe the portion that you disagree with and give
the reason why you disagree with it. If
you have previously paid the debt, you need to supply them with a copy
of the cancelled check or other proof of payment. Be
sure you include the name of the creditor with whom the debt
originated, the number that was assigned by the collection agency or
debt collector, and your name and address. Keep
a copy of your letter or written statement for your records.
As soon as
the collection agency or debt collector receives your written statement
they must discontinue attempts to collect the debt until they have
proof that you owe the debt. In addition,
they must forward a copy of the proof to you. They
may, however, proceed to sue you for the debt.
Federal Fair Debt Collection Practices Act, you may notify a collection
agency or debt collector, in writing, that you want them to cease
further communication with you and they can no longer communicate with
you except as follows:
Advise you that they are stopping their effort to collect
the debt; or
Advise you that they intend to take action, such as a
lawsuit, against you.
notification in writing should include your name and address; the
account number on the statement you received from them; the date; a
statement that you are exercising your rights under the Federal Fair
Debt Collection Practices Act; and, a statement that you want them to
stop calling or writing you, or both. Mail
the original to the collection agency or debt collector, send a copy to
the original creditor, and retain a copy for your records.
This will not eliminate the debt or your obligation to pay
the debt. Keep in mind that the collection
agency or debt collector may sue you for the debt.
All this statement in writing does is stop the calls and
letters from them. If they contact you
after receiving your statement, other than advise you they are stopping
to collect the debt or that they intend to take action against you,
then they have violated the Federal Fair Debt Collection Practices Act. You may bring an action against them for money
damages and attorney fees.
to the Federal Fair Debt Collection Practices Act, the Florida Consumer
Collection Practices Act prohibits harassment, false or misleading
statements and unfair practices by collection agencies and debt
collectors. Some violations of these acts
are listed below:
They threaten to tell your employer or neighbors about the
Threaten violence against you;
Threaten to have you arrested;
Communicate with you or your spouse more than three times
Harass, intimidate, threaten or embarrass you;
Imply that documents sent to you are legal documents or
Imply that you can be deported; or
Solicit a postdated check in order to threaten criminal
Trade Commission is the federal agency that takes complaints and they
may be contacted at:
www.ftc.gov or call toll-free
1-877-382-4357. The Florida agency is the
Attorney General’s Office, Tallahassee, Florida. Their
phone number is: 850-414-3300.
To help you
successfully prove that a violation has occurred, you may want to do
the following: Keep all letters and
written communications from the collection agency or debt collector to
you and from you to them in one location, including envelopes; keep a
list of all telephone calls you receive, including the date, time,
names of persons with the collection agency or debt collector, and
brief description of conversation; and keep a list of all telephone
calls they have made to anyone else.
cases, the management of collection agencies will not tolerate unfair
practices. You may wish to first contact
the management to discuss the problem with them. Generally,
they will take steps to prevent further violations.
collection agency or debt collector violations cause you physical or
emotional problems, contact an attorney for possible legal action.
military expects its members to pay their just debts in a proper and
timely manner. Under Department of Defense
Directive 1344.9 (DODD 1344.9) a just debt is a financial obligation in
which there is no reasonable dispute as to the facts or the law, or one
reduced to judgment which conforms to the Soldiers’ and Sailors’ Civil
Relief Act, if applicable.
military services have no legal authority, except in the case of court
ordered alimony or child support, to require military members to pay a
private debt or to direct any part of their pay for its satisfaction. If the debt is a just debt, the military
member’s commander may write a letter of reprimand in their permanent
record, or other actions such as denial of reenlistment.
However, the commander must make sure there is no
bankruptcy on file. Enforcement of private
debts is a matter for civil authorities.
collector or collection agency may not contact the military member’s
commander unless they have a written and signed consent from the
military member, a court order permitting contact, or a court judgment
against the military member.
Soldiers’ and Sailors’ Civil Relief Act of 1940 (SSCRA) was enacted to
recognize that military members who incur debts prior to active duty
may not be able to afford their loan payments on active duty pay. The SSCRA limits the legal actions creditors
may take when collecting debts that were incurred prior to active duty. In addition, a military member may have the
interest rate reduced to 6% on their debts upon their request. New debts or loans do not qualify for the
reduced interest rate. The military
members must send the following: copy of
military orders confirming their active status and a completed request
form for interest rate relief by mail to: Point
Loma Credit Union, Financial Assistance Department, Attn:
Soldiers’ and Sailors’ Review, 9420 Farnham St., San
Diego, Ca. 92123, or they may fax it to: 858-495-7140
(Soldiers’ and Sailors’ fax line).
consider bankruptcy. However, filing
bankruptcy does not eliminate all debts. In
addition, some of the disadvantages to filing bankruptcy includes the
loss of credit for 7 to 10 years and the loss of some possessions. You should consult with an attorney to learn
more about bankruptcy. Read more about the new bankruptcy laws here.
the following resources for credit repair and learning how to deal with
“Salary and Wages”
defined for Purposes of Florida Statutes § 222.11.
Brock v. Westport Recovery Corp., 832 So.2d 209 (Fla. Dist. Ct. App.
4th Dist. 2002), the court quashed the continuing writ of garnishment
because Appellant’s earnings were not “salary or wages” within the
meaning of Florida Statutes Section 77.0305 which refers to Section
222.11 of the Florida Statutes. In determining what classifies as
earnings stated, the court said “the relevant inquiry is often whether
a person’s employment is a salaried job or is in the nature of running
a business. For the wage and salary exemption to apply, the debtor must
not only perform personal services to the business, he must also
receive regular compensation dictated by the terms of an arms-length
employment agreement.” When the debtor determined the amount and timing
of compensation, the debtor was not entitled to the exemption. We at
FHS disagree, as compensation in the form of commission may very well
entail this scenario. See below.
opinion stated that “[a]n employee has regular earning pursuant to an
employment agreement. He or she is paid directly for personal labor or
services. By contrast, this Debtor and others similarly situated who
run their own businesses, have control over the timing and amount of
their compensation. Certainly, the legislature did not intend to exempt
all funds a person chooses to draw from a business where the individual
has full discretion over what expenses to pay or not pay in order to
fund the draw.” The court determined that the services Appellant
performed were more in
the nature of a business and not performing a job. As a result, they
were not wages.
they were not wages, the Appellee was not able to cause a writ of
garnishment, which is directed towards “salary or wages.”
planning to take advantage of the wage exemption under Florida Statutes
Section 222.11, the employer/employee relationship must be clearly
established. The relationship can be established by using an employment
agreement and ensuring that the employee is paid a wage (at least as
frequently as other employees).
has been a split in the Florida courts as to whether the earnings of an
independent contractor are protected by Fla. Stat. § 222.11. a. In In
re Glickman, 126 B.R. 124 (Bankr. M.D.Fla. 1991) the court found that
nothing in the wage statute limits its protection to employees. The
court then went on to add that amounts owed to a dentist who was an
independent contractor were exempt because it was owed for personal
labor and services. In In re Pettit, 224 B.R. 834 (Bankr. M.D.Fla.
1998), the Bankruptcy Court held that commissions and bonuses earned by
debtor are exempt earnings pursuant to Fla. Stat. § 222.11 even though
the debtor was labeled an independent contractor. The Pettit decision
noted that it would not base its decisions solely on whether a debtor
is labeled an employee or independent contractor.
the court adopted a totality of the circumstances approach to determine
whether debtor’s compensation constituted exempt earnings pursuant to
Fla. Stat. § 222.11. The court stated the debtor was an independent
contractor whose duties were essential to a job and not in the nature
of running a business. He received regular compensation dictated by the
terms of an arm’s length employment agreement, although such agreement
was oral. The company owner had complete discretion as to the timing
and the amount of debtor’s compensation and could adjust it if he chose
to do so. Accordingly, the court held that, in light of all of the
circumstances, debtor’s commission and bonuses were exempt earnings
pursuant to Fla. Stat. § 222.11.
deciding this case, the court did a survey of the case law with respect
to said statute both before and after its amendment in 1993. The court
noted that most Florida Bankruptcy Courts have held that money due for
personal labor or services can only be earned by an employee;
consequently, wages paid to an employee are exempt, whereas
compensation paid to an independent contractor is not.
court also noted that in 1993, the Eleventh Circuit Court of Appeals in
Schlein v. Mills (In re Schlein), 8 F.3d 745 (11th Cir. 1993),
addressed the issue of whether Fla. Stat. § 222.11 exempts compensation
of independent contractors. In that case, the debtor conceded he was an
independent contractor but argued that the phrase “money due for
personal labor or services” was not limited to earnings of employees.
The court disagreed and held that “earnings” of an independent
contractor are not money due for personal labor or services and were
thus not exempt pursuant to Fla. Stat. § 222.11. In October, 1993, the
Statute was amended and the term “earnings” was substituted with “money
or other thing due to any person… or the personal labor or service of
such person,” and the term “earnings” was defined as compensation paid
or payable in money of a sum certain for personal services or labor
whether denominated as wages, salary, commission or bonus.
court noted that only two cases have dealt with the effect of the
amendment in Schlein: In In re Zamora, 187 B.R. 783 (Bankr. S.D.Fla.
1995) the debtor, a sole practitioner, owned a law practice and a
marina. The Zamora court held that cash in bank accounts belonging to
debtor’s law practice and marina as well as accounts receivable from
his law practice were not exempt earnings pursuant to Fla. Stat. §
222.11. The court pointed out that in addition to performing personal
services as a business, the debtor must receive regular compensation
dictated by the terms of an arm’s length employment agreement to
perform services that are much like a job. In Zamora, the court found
that the debtor was in complete control of the business, the amount of
his compensation and terms of his employment.
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