Florida Judgements and Bankruptcy | The Debt Collection Process

Florida judgments seem to be finding their way to my bankruptcy practice lately.  As a result of a new law relating to mortgage foreclosure deficiencies, I am having to help more people who find themselves at the receiving end of the debt collection process.  They are surprised to be getting sued, even though their foreclosure is long over.  What they, and any person who is in financial distress, need to understand is that a Florida judgment is the most pernicious form of creditor action, for which there is no real cure other than bankruptcy.

A judgment represents the final stage in the debt collection process. It is a piece of paper, signed by a judge, that gives the creditor the legal right to take property of the debtor until the full amount of the judgment, plus interest, has been paid.

What property does the creditor get to take? 

After a Florida court enters a judgment, the debt collection process begins. The creditor is entitled to seize the debtor’s “non-exempt property.”  The debtor is entitled to an allowance of certain property that can be kept, and all remaining property is  “non-exempt.”  This is the same property that a debtor would be entitled to keep when filing a bankruptcy.

In Florida, the debtor is entitled to the full value of a homestead, personal property valued at $1000, $1000 of equity in an automobile, retirement and educational savings accounts, and 75% of earned wages (100% of earned wages if the debtor is the head of household).  There are other exemptions, defined by law, but these are the most common exemptions used by debtors to keep property in bankruptcy, or when defending the debt collection process.  To learn more about exemptions, read my blog post about them.

How does the creditor get my property?

The most common form of creditor action is garnishment. The creditor asks the court for a writ (another piece of paper) that is sent to the debtor’s employer, instructing the employer to deduct a portion of the debtor’s wages (up to 25%) to pay the judgment.

The garnishment continues until the debt is paid in full. Writs of garnishment can be sent to the debtor’s bank to collect money on deposit. As part of the debt collection process, the creditor may also levy or seize non-exempt property, using the force and authority of the county sheriff. Cars,and other personal property can be levied upon and sold, with the cash proceeds used to satisfy the debt.

What about real estate?

A judgment filed in the public records becomes a lien on all real property in the county where it is recorded. That lien can be foreclosed (but not on homestead), or prevent the debtor from selling the property until the debt is paid.

How long does a judgment last?

Under Florida law, a recorded judgment can be enforced for 10 years, and if it is re-recorded, another 10 years, for a total of 20 years. During that entire time, the creditor is entitled to continue with the debt collection process. And the lien created by the Florida judgment will encumber all real and personal property.

What can be done about a judgment?

bankruptcy is the only remedy to permanently eliminate a Florida judgment.  Most judgments can be discharged in a Chapter 7 or Chapter 13 bankruptcy. (There are some that cannot be discharged). Short of that, the debt must be repaid in full, unless the creditor agrees to accept less. Interest continues to accrue on the unpaid balance of the debt, at a rate defined by and reset each year by the Florida Office of the Comptroller.

Sometimes, clients will want me to defend collection efforts, such as garnishment, so as to stop the immediate effects of the debt collection process. However, like taking medicine that only treats symptoms, this is no cure for the underlying problem. For a free consultation to discuss your situation, call Jeff Badgley’s Orlando office at 407.781.0420.

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