Florida Judgment Collection Law

Florida judgment collection laws give creditors legal tools to collect money damages awarded in a final judgment. In Florida, final judgments are entered against the losing party (judgment debtor) in favor of the prevailing party (judgment creditor).

Judgment collection laws allow a creditor in Florida to begin the collection process once a final judgment is entered. The statute of limitations for debt collection is five years. After five years from the last payment, a creditor cannot sue to collect on a debt.

How Debt Collection Law Works in Florida

Debt collection on a judgment does not start immediately after the final judgment is issued. There is a 10-day period after the judgment date during which either party can request a rehearing. Rehearing requests are usually denied, but if approved, they stay the enforcement of the judgment until the court rules on the rehearing motion.

A court’s final judgment does not provide the prevailing judgment creditor any money. Nor does the final judgment, by itself, take any of the debtor’s property.

If the judgment debtor doesn’t pay, the creditor must use legal tools to enforce the judgment against the debtor’s assets. Florida law allows a judgment creditor to seize or place liens against a debtor’s assets to satisfy a money judgment.

Effective asset protection planning requires understanding the tools judgment creditors may use to discover and take non-exempt assets.

What Happens If You Don’t Pay a Judgment?

If you do not pay a judgment, the creditor will use legal tools to find and take your assets in order to satisfy the debt. The judgment creditor can (1) garnish your bank account and your wages, (2) require you and your spouse to reveal all of your financial information, and (3) place a lien on any non-homestead property.

People who pay their debts on time have little experience dealing with debt collection or money judgments. They are unaware of the problems they will face if a business failure or personal financial problem leads to a creditor obtaining a court judgment for money damages.

What Happens If You Have a Judgment Against You in Florida?

After a judgment is entered against you, the judgment creditor can garnish your bank account and wages, require you to reveal all assets belonging to you, and place a lien on any non-homestead property. However, Florida law cannot impose criminal liability for not paying a civil money judgment. A creditor cannot have you arrested for non-payment of a debt or for your inability to pay a court judgment.

People who pay their debts on time have little experience dealing with debt collection or money judgments entered against them. In the event of an economic downturn or personal financial catastrophe, the same people become concerned about what will happen if they cannot pay their debt obligations. They imagine what would happen if a creditor sues them and gets a judgment against them for non-payment. They will ask for advice about what they should do if a court enters a money judgment against them in favor of a creditor.

In some cases, a creditor may obtain a judgment and not actively try to collect money thereafter. This is common when the creditor has reason to believe that you do not have financial ability to pay, or if the creditor does not want to do anything to force you into bankruptcy where the debt would be discharged. Creditors do not want to spend “good money” in futile attempts to collect “bad debt.”

Most money judgments against individuals or small businesses are settled for amounts significantly less than the face amount of the judgment. Asset protection that maximizes your exempt assets puts you in the best position to leverage a successful debt settlement.

How to Collect a Judgment in Florida

To collect a judgment in Florida, creditors can use any of the many legal tools provided by the state’s debt collection laws. In Florida, there are six primary ways to collect a judgment:

1. Judgment liens
2. Execution and levy
3. Vehicle seizure
4. Levy on business interests
5. Bank account garnishments
6. Wage garnishments

Judgment Liens

Florida judgment collection laws allow a judgment creditor to obtain a lien of all the debtor’s personal property located in Florida by filing a judgment lien certificate with the Florida Secretary of State. Recording a certified copy of the judgment in any county creates a judgment lien on the debtor’s real property located in the same county, other than homestead property. The recorded lien will prevent the debtor from making an insured transfer of real property title to a mortgagee or buyer.

The judgment lien encumbers subsequent sales or other conveyance of the debtor’s personal property. The purchaser or transferee takes possession of the property subject to the judgment lien.

Execution and Levy

Execution and levy is a collection remedy used to force the sale of a debtor’s tangible personal and real property. Execution and levy are used to seize real estate, stock in corporations, and the debtor’s personal property. Assets frequently subject to execution include the debtor’s automobiles, stock in private companies, and valuable home possessions. The creditor can execute against the debtor’s property in possession of a third party.

A creditor must identify in advance the debtor’s property subject to execution and levy. The county sheriff executes the levy by physically seizing the debtor’s property. The sheriff sells the debtor’s property at a public auction. The sheriff applies the sales proceeds, minus expenses, to satisfy the judgment. Any preexisting liens on the property must be paid before any money is available to pay the judgment creditor. The debtor can bid for their own property at the auction.

Seizure of Vehicles

In Florida, a judgment creditor can seize a vehicle through a sheriff levy and execution. Creditors frequently direct the sheriff to levy upon automobiles that a debtor owns free and clear.  The sheriff can tow the car from a public parking lot or a public street. The sheriff will sell the debtor’s car at a public auction. The judgment creditor will be entitled to the proceeds of the sale minus sheriff fees, storage costs, and auction fees. Taking the debtor’s car deprives the debtor of transportation and exerts pressure on the debtor to pay the judgment.

Creditors typically do not levy upon automobiles subject to significant car loans and liens because few people will pay significant money to buy a car subject to a lien at an auction. In addition, the lender on the vehicle must be paid first from the proceeds of any sheriff sale. A car with significant debt is not a good collection target.

Some debtors lease their motor vehicles instead of owning them. Leased vehicles are not assets owned by the debtor. For this reason, a leased vehicle cannot be subject to levy and execution for a judgment.

Levy on Privately Held Businesses Interests

Creditors can use execution and levy against debtor’s shares of common stock of their own business. The sheriff will sell the stock at auction. The creditor can bid at the auction the amount of its judgment for the stock. The party that purchases the stock at auction steps into the debtor’s shoes as a stockholder. If the debtor owned one hundred percent of issued stock the successful bidder at auction gains control of the company and all company assets including, for example, company bank accounts.

Suppose the debtor states that their privately held corporation has not issued stock, or that the debtor has misplaced the stock certificates. In that case, the creditor can obtain a court order directing the corporation to reissue stock certificates. The court can hold the debtor in contempt if they does not comply with the order to issue stock. The court may order the debtor to retrieve already issued stock certificates located outside of the court’s geographical jurisdiction.

Contrarily, the creditor may not execute and levy upon the debtor’s membership interest in a partnership or multi-member LLC. The creditor may not levy assets owned by the LLC. The creditor’s sole remedy is a charging lien on partnership or LLC profit distributions payable to the debtor. A debtor’s membership interest in a partnership or multi-member LLC with a properly drafted partnership agreement or LLC operating agreement in Florida provides asset protection.

Garnishment of Money

Garnishment is the judgment collection tool a creditor uses to seize any property owed to the debtor by a third party. For example, money the debtor holds in a financial account constitutes a debt owed to the debtor from the financial firm. Wages and salary are debts owed to the debtor from their employer.

A writ of garnishment authorizes the judgment creditor to collect judgments from either the debtor’s bank accounts, future wages and commissions, financial accounts holding publicly traded securities, or any debts or rights to money payable to the debtor.

Garnishment actions begin with the clerk of court’s issuance of a garnishment writ. The creditor serves the writ upon the debtor’s employer, bank, financial institution, or other person obligated to the debtor. A garnishment writ notifies the third party that they must retain an asset or money owed to the debtor and thereafter pay the money as directed by the court.

The creditor is not required to provide advance notice to the debtor prior to serving a writ of garnishment. Money subject to garnishment must be in the actual possession and control of the garnished third party. The money must be owed to the debtor without condition, and the amount owed must be liquidated (fixed) in amount. In most instances, a writ of garnishment pertains to current debts and obligations owed to the debtor. Only debts owed to the debtor at the time the writ is served are frozen and subject to garnishment. The writ of garnishment does not attach to money owed to the debtor in the future, except for wages and salary, as discussed below.

Wage Garnishment

The debtor’s salary and wages may be subject to a continuing writ of garnishment. A single writ of garnishment served upon the debtor’s employer garnishes all future non-exempt wages, salary, and commissions payable to the debtor. The garnishment continues in effect until the judgment is paid, the debtor leaves employment, or the debtor files bankruptcy.

A creditor cannot get a continuing writ of garnishment against payments other than wages. For example, money payable by a company to a debtor working as an independent contractor, or rents owed to a landlord, are not subject to continuing writs.

Florida debt collection law exempts some types of debts from garnishment. For example, wages payable to a head of household are exempt without limitation from continuing wage garnishments. Periodic payments due to the debtor from social security, annuities, and retirement plans also cannot be garnished in Florida. Garnishment procedures are complicated and are strictly construed and enforced in Florida courts. Some debtors defeat garnishments by finding procedural flaws in the garnishment writ and application.

Florida Debt Collection Laws

Florida debt collection laws are governed by the Florida Consumer Collection Practices Act (CCPA) which prohibits both debt collectors and creditors from using certain types of abusive, deceptive, and misleading debt collection tactics. The CCPA supplements the protections provided by the federal Fair Debt Collection Practices Act (FDCPA). The CCPA does not apply to all debts.

Some examples of abusive debt collection tactics include lying about who they are, the amount owed, or potential outcomes; using abusive practices or harassing the debtor; threatening to hurt the person; using obscene or profane language; repeatedly calling or texting the person; treating the person unfairly; telling anyone else about the money owed other than the debtor’s spouse; and contacting a debtor before 8 AM and after 9 PM unless the individual agrees.

If a debt collector violates Florida debt collection laws, consumers have several options. They can sue the debt collector in state court, report the action to a government agency, report the action to the state attorney general, or use the violation as leverage in debt settlement negotiations. If you lost wages or had medical bills because of things that a debt collector did, you can sue for those damages. If you can’t prove damages, a judge can still award you up to $1,000 plus reimburse you for attorney’s fees and court costs.

Proceedings Supplementary

Florida statutes provide for “proceedings supplementary” which allow a judgment creditor to collect property in the hand of third parties. This includes property in which the debtor has a present or a prior interest but which property is presently held by a third party. The proceedings are governed by Florida Statute 56.29. Proceedings supplementary is the most comprehensive creditor remedy available under Florida law. It assists judgment creditors’ satisfaction of their judgments by using equitable remedies against various types of debtor rights and property that are not subject to garnishment, attachment, or execution and levy.

Under Florida law, proceedings supplementary allow the creditor the following options:

1. Avoiding fraudulent transfers: Creditors may sue third party recipients of alleged fraudulent transfers to reverse the transfer or obtain a judgment against the recipient for the value of property transferred. The court may enter an order to apply transferred real property to satisfy a judgment or have the sheriff seize fraudulently transferred personal property.
2. Reversing fraudulent conversion: Creditors may obtain a court order reversing the debtor’s use of non-exempt assets to purchase or obtain an exempt asset if the purchase was intended to protect the non-exempt assets from creditors. An example of a fraudulent conversion is using non-exempt cash to buy an exempt annuity contract.
3. Piercing corporate veil: Creditors may sue individuals to enforce judgment against a corporation where the corporation has been established to defraud creditors, or where the company is the alter-ego and continuation of a prior business.
4. Reverse piercing: Creditor sues a corporation to satisfy judgment against an individual who conveyed personal assets to an alter-ego corporation to avoid collection.
5. Charging liens: A judgment creditor can apply for a charging lien against the debtor’s ownership of limited partnerships and limited liability companies.
6. Injunctive relief: Creditors may seek injunctions against the debtor preventing subsequent transfer of the debtor’s property. The creditor must demonstrate that fraudulent transfers are imminent. The injunction is essentially an asset freeze.
7. Receivership: In extraordinary circumstances, a creditor may convince a court to appoint a receiver to take possession of the debtor’s property. The receiver manages the debtor’s property and preserves its value during collection procedures.
8. Equitable liens. A creditor may have a court declare an equitable lien against the debtor’s real property including, when applicable, the debtor’s homestead.

Examination of the Debtor in Court

The proceedings supplementary statute enables a judgment creditor to compel the debtor to appear in court and testify before a judge or magistrate about the debtor’s assets. The creditor may require the debtor to bring to the court hearing specific documents or property. The examination of the debtor must be set in the county in which the debtor currently resides.

The creditor has broad authority to examine the debtor on all matters and things pertaining to the debtor’s personal or business interest, and the creditor and the judge may ask any question that, directly or indirectly, may aid in satisfying the judgment. The creditor may also examine third parties who may be the debtor’s “alter-ego” or who may be transferees of the debtor’s property.

Turnover of Property

A judgment creditor may use proceedings supplementary to gain control of a debtor’s non-exempt property by ordering the debtor or third parties to turn over assets. The court is authorized to hold the debtor, or others in possession of the debtor’s property, in contempt for failing to obey a property turnover order. The court may order the debtor to retrieve property that is not currently in the debtor’s possession.

Initiation of Proceedings Supplementary

A creditor initiates proceedings supplementary by filing a motion with the court that issued the final judgment. The statute requires the creditor to include certain allegations in the motion. Proceedings may be commenced at any time during the 20-year life of a final judgment.

Collection by Other Federal Agencies

United States federal agencies, such as the Federal Trade Commission (FTC), sometimes sue individuals in federal court for money damages and fines for violation of federal rules and regulations. Frequent examples are Federal Trade Commission suits against telemarketer firms or violators of anti-trust laws, or suits by the Securities and Exchange Commission (SEC) for violation of investment regulations. The federal government’s collection of judgments is different, in some respects, from a private creditor’s collection of a judgment for damages.

The Federal Debt Collection Procedures Act (Chapter 176 of Title 28 of the United States Code) (FDCPA or the Act) provides the federal government tools to collect debts owed to government agencies. The Act has separate subchapters dealing with pre-judgment remedies, post-judgment remedies, and the reversal of fraudulent transfers. The U.S. government’s post-judgment collection tools are comparable to state law collection remedies and include judgment liens on real property, garnishment of accounts and debts, and levy on personal property.

In addition, some federal agencies, such as the IRS or the SEC, have statutes that provide enhanced collection procedures for debts owed to their agency.

A Florida resident may use Florida asset exemptions against a federal agency collection. A defendant debtor may assert property exemptions available under applicable state law in the jurisdiction where the debtor has resided for the most recent 180-day period. The defendant must have resided in Florida for 180 days to assert Florida exemptions under the federal collection statute. In contrast, there is no minimum residency time period in state court collection proceedings where Florida exemptions apply immediately upon Florida residency.

The Florida residency time requirement in federal collection does not apply to a tenants by entireties property. Tenants by entireties is a property description, not a statutory “exemption,” and the federal statute does not impose a 180 day Florida residency requirement for individual married debtors to protect tenants by entireties property.

The federal collection laws require the debtor to assert an exemption claim in a court filing. The debtor’s filing of an exemption statement stays further government actions to dispose or take possession of the property until the court considers the exemption claim. Moreover, the government may not seize or interfere with property the government has reason to know is exempt even if the debtor has not yet filed an exemption application.

U.S. agencies may pursue a defendant’s property even before the government agency’s claims are fully adjudicated in court and before the court enters a final judgment against the defendant debtor. The FDCPA provides pre-judgment remedies including attachment, garnishments, or appointment of a receiver. The government may apply for attachment at any time after it files its initial complaint. The Act requires that the government allege in a sworn statement a statutory justification to attack a defendant’s assets before judgment. These justifications include, for example, the allegation that the defendant is about to leave the jurisdiction of the court, or that the defendant is about to fraudulently transfer or fraudulently convert assets with the effect of hindering or delaying the United States’ collection.

Pre-judgment remedies are also available in most states, including Florida. What makes the U.S. government’s pre-judgment remedies so powerful is the absence of a bond requirement. Section 28 U.S C. 3101(C)(3) states that no bond is required by the United States as a condition of pre-judgment actions against a defendant’s assets. For this reason, federal agencies often seek an immediate freeze of a defendant’s assets upon filing a civil action.

Under Florida law, a creditor that seeks to freeze a defendant’s assets before a judgment must post a bond to compensate the debtor in the event the debtor prevails in the litigation, or the assets are found to be exempt. The cost of a pre-judgment collection bond is significant. The costs plus liability risks deter most state court civil creditors from seeking a pre-judgment asset freeze against civil litigation defendants.

Credit Card Judgments

If a credit card company gets a judgment against you for unpaid credit card debt, you need to prepare for the creditor’s attempts to collect the judgment. Know that a credit card judgment is not a criminal matter. It is not “illegal” for you not to pay a credit card company, and the courts cannot put you in jail if you do not pay the judgment. The court’s credit card judgment also does not automatically take your money or your future earnings. It is up to the creditor to use legal tools to collect money from you to satisfy its judgment.

Often, a creditor will not make any attempt to collect a small judgment because the legal costs of collection are greater than the creditor’s probable recovery. Also, most court judgments do not reimburse the creditor for its own legal fees incurred in trying to collect the judgment.

Some people faced with a credit card judgment immediately think they will have to file bankruptcy. This is a mistake. The judgment creditor has more leverage in bankruptcy court, and bankruptcy law strips some of a debtor’s asset exemptions. Bankruptcy should be the debtor’s last resort.

FAQs about Florida Debt Collection Laws

The following are answers to some frequently asked questions about Florida debt collection laws.