Legal Collections in Florida Explained
The legal collection process begins when an attorney is retained to pursue or defend a claim. Generally speaking, the attorney is working under a written agreement ("retainer agreement") to pursue the claim on behalf of the client and in exchange the client agrees to pay the attorney for his or her services. This process, however , soon becomes legally complex because nothing in a retainer agreement addresses what happens if the client does not pay and the attorney retains a balance due on the representation. The attorney may be required to pursue the balance owed through the court system and this process is known as the legal collections process. Just as with any case, the Florida Rules of Civil Procedure must be complied with and specific requirements must be met for the legal collections process to be successful.
Florida Collection Statutes
At the state level, a number of Florida laws govern legal collections. The most important of these is Chapter 559, Florida Statutes, the Florida Consumer Collection Practices Act (FCCPA), and it makes an offense of many practices commonly used by bill collectors. To be clear, a creditor filing a lawsuit to recover unpaid debts is perfectly legal. However, in many states, once a creditor files suit against a debtor, the creditor has basically flagged the debtor account as an "easy collection," at least for the next 18 months, and other collection attorneys will actively pursue these delinquent accounts until the debts are collected. Once the debtor is being pursued by a collection lawyer, the creditor is out of the collections business as regards the case – in most cases – and it is left to this collections attorney to resolve the matter. In short, all parties are advised to do their due diligence and be fully aware of collection practices in the state of Florida.
The FCCPA defines 30 different prohibited trade practices, ranging from the limiting of hours of communication to the prohibition of false or misrepresentative forms in communication. The law also places restrictions upon collectors of the debtor’s wages or government benefits. But while the law might seem strict, many violations of the act are simple inadvertent errors, with the Collector having tried their best not to act in a way that violates the law. For example, the statute prohibits any False or Misleading Representation of the Character, Amount of Status of Any Debt, and "pursuant to Section 559.72(9), no person shall, directly or indirectly, in connection with the collection of any debt, use any misrepresentation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a debtor." Yet there are many attorneys who may not understand the nuances of the statute, so well-meaning attempts to collect a debt can inadvertently violate the law.
The Collection Agency Act is Florida Statute Section 559.5551 [aka Statute of Limitations]. Under the act, no debt collector can make a collection without the proper licensing, or call when a debtor has previously requested to cease all communication. The law also requires that a creditor must maintain complete records of all financial records, and inform the debtor of the authentic identity of the actual holder of the debt, including the date it was purchased. These requirements can sometimes be easily overlooked so while they can technically be violations of the law, they do little to any harm of the debtor. Of course, ignorance of the law on the part of the debtor collector cannot be cited as a defense, but telling the Collector of the requirement so that compliance can be easily followed is usually a better strategy. Even a phone call reminding the Collector that he (conveniently ) may have overlooked Florida Statute Section 559.551(1)(a) & (b) (failing to provide authentic identity of the creditor and failing to maintain records) often gets results quickly, especially if you explicitly mention your attorney’s involvement.
The Sixth Circuit Court of Appeals in Kyle v. Edwin Bosch Corp, 464 F.3D 634 (6th Cir. 2006) found that an attorney who violates the Fair Debt Collection Practices Act by sending collection letters is not considered a "debt collector" under the FDCPA if that attorney doesn’t regularly engage in debt collecting activities. However, adhering to all of the statutes referenced in this article is highly recommended anyways, and debtors should always be ready to inform a Collector of the law if they believe a statute has been violated. Failure to follow the statute could, in some cases, lead to far greater penalties, which could cause a Collector to think long and hard about intentionally violating the act.
On the federal level, the Fair Debt Collection Practices Act (FDCPA) broadly regulates the collection of debts by third-party or outside collectors. Outside collectors are those who are hired by a creditor to collect debts on its behalf, and they must comply with Section 805 (27 U.S. Code § 1692), which states: (a) Communication with debtor. Without the prior consent of the consumer given directly to the debt collector, or the express permission of a court, a debt collector may not communicate with a consumer in connection with the collection of any debt- (1) if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, the attorney’s name and address, unless the attorney fails to respond within a reasonable period of time to a request for verification of the debt or the name and address of the original creditor and the debt collector has made no further contact with the consumer or the consumer’s attorney . . . .
All of these statutes are in place to protect consumers in the state of Florida.
Importance of Legal Collections Attorneys in Florida
Legal collections attorneys in Florida have the specialized knowledge and resources to assist creditors in recovering the money they are owed. They help business owners and managers decide on the best methods of pursuing debtors—both legal and non-legal, to recover the full amount of the debt. A qualified legal collections attorney will have a thorough understanding of the collections process, the applicable rules and regulations and will know what works best under the circumstances.
In addition to providing guidance to businesses as they pursue collections, legal collections attorneys also take on the bulk of work directly involved in ensuring debts are collected. For example, attorneys: Legal collections attorneys work in a variety of ways. Some handle pre-litigation collections matters, while others assist clients only after litigation becomes necessary. Some legal collections attorneys have both pre-and post-litigation capabilities and preferences. Most offer services on a contingency fee basis, enabling creditors to avoid up-front costs and fees.
Process of Legal Collections in Florida Courts
When receivables go unpaid, the most logical next step after demand for payment, is to pursue legal collection. In Florida, pursuing a legal collection is only recently becoming popular due to a growing judicial trend that allows you to seek your attorneys’ fees from your adversary. A legal collection is, simply, pursuing a lawsuit if your debtor does not voluntarily pay the debt. Once your lawsuit is filed, there are three common steps: a motion for judgment on the pleadings, taking the debtor’s deposition, and obtaining a final judgment. A plaintiff may also seek an injunction, or injunctive relief, but it is not common when pursuing a judgment. An injunction is a court order prohibiting the wrongful conduct of the defendant (e.g., pay your debts). Injunctions may be used in connection with commercial, business, or collections matters. However, injunctions are expensive and take circuitous routes through the courts to become operative.
The first common step is to file a motion for judgment on the pleadings. Filing this motion occurs after the opposing party, the debtor, has filed their Answer to your Complaint. An Answer, in litigation, is the formal response to the initial lawsuit complaint – or the plaintiff’s expository document alleging the defendants’ acts that support a legal remedy.
A motion for judgment on the pleadings essentially argues that the referring complaint and answer are sufficient to give the judge the information needed to make a decision on the case. If the judge agrees, the judge will grant your motion for judgment on the pleadings giving you a legal right to collect on the debt and sign an order of judgment. Very few of these motions are granted by the court. Instead, the judge may order your to take the debtor’s deposition.
A deposition is a formal process, usually conducted in attorneys’ conference rooms, where the debtor under oath responds to your or your attorney’s questions. The debtor is under oath and the questions are recorded, either by a court reporter or a stenographer, either of which can be expensive. The goal of taking the debtor’s deposition is to obtain information that might be useful in helping you with the collection process. For example, the debtor may reveal valuable facts such as: other creditors, banks where they have accounts, income sources, job information, and personal information that you would not otherwise have known. This valuable information permits you to focus on the most effective collection action.
Once the debtor’s deposition is obtained, the next common step is to obtain a judgment. If a motion for judgment on the pleadings was filed and the court granted the motion, the judgment will typically be entered by the court, procuring attorneys’ fees and costs to you. If the motion was denied, and if no other actions are ordered by the court, then a final judgment for the amount due is obtained after the completion of the debtor deposition process.
A final judgment is an order that is authorized by law for the purpose of settling the dispute before the court. This allows you to obtain legal relief for the amount due. In laying out the legal and factual details of the judgment for money, it is important to ensure that the amount is accurate and comprises interest, attorneys’ fees, and other costs. Errors will allow the debtor to challenge the final judgment. Practicing law for more than twenty years, I can tell you the most frequent error in a final judgment is not including the proper rates of post-judgment interest (12 percent in Florida); however, there are many other issues to consider: whether the court has jurisdiction (often referred to as venue), the type of claims, and other costs associated with suing the debtor. It is very important to have someone with experience handle the drafting of the final judgment.
Techniques for Effective Debt Collection
Florida law offers a number of strategies for debt recovery in small claims and equitable actions. In some situations, the Florida debt collector may better accomplish its objective through pre-collection efforts with an attorney’s office. Some of these pre-collection efforts may include: Additionally, the Florida debt buyer may have legal recourse against the debtor’s parent or guardian. Florida Statute § 61.101(4) provides that a creditor may request, and a Court may issue, a writ of garnishment against the state of a guardian or other fiduciary, the marital settlement agreement is filed with dependency action, or the fact a divorce action has been filed. Florida Statutes § 55.201113 provides for a judgment lien against real property. A judgment lien is a tool that allows the Florida debt collector to pursue recovery of assets or property being transferred by a third party to a debtor. Real property includes the land, buildings, and fixtures interconnected with said property. The judgment lien attaches to the land and buildings at the time of recording. Obtaining a judgment lien on real property requires recording the Florida judgment in the appropriate official public records for the county where the real property is located. The judgment lien is perfected as to the interest of the debtor in any real property that the debtor acquired after the date the judgment is recorded. If a third party is paying on an asset, structured settlement, or structured order (i.e. annuity), the Florida debt buyer may have legal recourse via garnishment. Florida Statutes § 56.061 provides that a judgment creditor may garnish the defendant’s rights and dividends that have accrued, or will accrue under an annuity, structured settlement, or structured order. As to degree of difficulty, garnishment can be difficult to obtain with a structure settlement. Florida Statutes § 56.061 states, in relevant part: [A] judgment creditor of a person may serve a writ of garnishment only as to weekly payments and with regard to a structured settlement payment if the structured settlement or structured order was not subject to a court order. [W]ith regard to a structured settlement payment, a judgment creditor of a person may serve a writ of garnishment with regard to any amount exceeding 25 percent of a payment under a structured settlement or a structured order in the same manner as a writ of garnishment served under s. 77.0305. [A] judgment creditor of a person may serve a writ of garnishment only as to a structured settlement payment in the same manner as a writ of garnishment served under s. 76.0305 , not withstanding the provisions of subsection (1). It is common in the Florida legal marketplace for creditors to seek satisfaction of their judgment in full, rather than via installment payments. This type of approach will continue until it becomes clear that the debtor will be unable to satisfy the judgment. Florida Statutes § 77.0305 provides as follows: After the application is filed with the court, a copy of the application, the writ of garnishment, the notice of filing of application for writ of garnishment, the notice of garnishment, and the form for claiming exempt property must be served upon the garnishee and the defendant in accordance with the Florida Rules of Civil Procedure. Judgment creditors and Florida debt buyers shall not be required to attempt to collect a judgment in installments before seeking a writ of garnishment. The judgment creditor or debtor may pay off the entire balance without requiring proof of inability to pay the judgment amount in installments. Judgment creditors and Florida debt buyers are entitled to attorney’s fees, excess court costs incurred, collection costs, reasonable presettlement interest, and trustee’s fees from a defendant who fails to pay when legally obligated to do so. Florida statute 77.0305(2) creates a presumption that the judgment is collectible in full, including fees and interest. Judgments are collectible in full where a judgment has been assessed. A judgment that has been assessed is defined as "a final judgment or an order issued after a hearing in open court." As they are under no obligation to look into installment payments, the collection of all judgments in full, plus interest, is what is customarily worked toward by a creditor/law firm. Florida construction and contract attorneys are well suited to provide advice and assistance in that regard. Although chapter 77 of the Florida Statutes provides an outline for writs of garnishment not based on a court order, the statutes do not provide for when the court will issue the writs. Therefore, scrutiny of the judgment debtor’s assets and degree of difficulty into collection is warranted before a court will issue the garnishment. The collection of judgments and other legal receivables in the State of Florida is an evolving field, one that has not been exhaustively addressed by the Florida Legislature. Experienced Florida construction attorneys that have experience with civil fraud and fraudulently represented debtors may best be suited to provide guidance and address specific issues for best collecting a judgment.
Preventing Violations and Staying Compliant
Because collections law is governed by not only state law, but by federal law as well, following the Fair Debt Collection Practices Act and other applicable compliance requirements is essential to avoid civil liability.
The FDCPA prohibits a debt collector from engaging in abusive conduct and requires strict adherence to its requirements. Any debt collector found to have violated the FDCPA may be liable to the individual consumer for actual damages, additional damages up to $1000, plus the consumer’s attorney’s fees. In addition, the FDCPA explicitly provides an individual consumer the right to recover the greater of the actual damages or $500,000 plus any attorney’s fees if similar conduct is likely to have occurred on at least ten occasions, or up to one per centum (1%) of net worth for a company or partnership plaintiff.
Other statutes that govern collections activity in Florida, such as the Florida Consumer Collection Practices Act and the Florida Deceptive and Unfair Trade Practices Act, also authorize the recovery of actual damages, attorney’s fees, and in some cases additional damages.
Selecting the Right Legal Collections Company in Florida
Choosing the right legal collections firm in Florida can be a complex task, but it is crucial to the success of your business’s collection efforts. Here are some important factors to consider when evaluating potential firms:
Specialization: Look for a firm that specializes in legal collections. These firms should have a thorough understanding of Florida’s legal guidelines and requirements for collections. They should also have experience in litigating collections cases, if necessary.
Reputation: Check the firm’s reputation with the Florida Bar as well as the Better Business Bureau. The best legal collections firms will have a wide network of satisfied clients and a strong overall reputation.
Staffing: You want to be sure that the firm you choose has the appropriate staff levels to adequately handle your collection needs. Make sure they have an adequate number of account representatives, lawyers, and support staff to handle your case load.
Fee Structure: Legal collections firm fee structures typically involve hourly rates for attorneys, but they can also include retainer fees, flat fees, or contingency billing. Be sure to fully understand how the firm bills you and how costs might be affected by additional steps in different cases.
Proven Track Record: A firm should have a long history of collecting on accounts similar to yours in size and scope. Ask the firm about their track record with clients in your industry, as well as their overall collection success rates.
Communication: Open, honest communication between you and the legal collections firm you employ is key to ensuring a successful relationship. Before making a decision, also verify that the firm keeps its clients informed on collection process and status each step of the way.
Closing Thoughts: Navigating Legal Collections in Florida
Florida’s legal collections process involves several formalities, which, if you understand, can often be your key to success. Avoiding common pitfalls may well be the difference between a successful recovery and lengthy litigation that ends in failure. A few of these missed formalities can be corrected by motion. However, if they are significant enough (e.g. your lawsuit was filed beyond the statute of limitations), they may well result in your defeat on a motion for summary judgment. At the very least , it can result in significant attorney’s fees to fix them, or prolonged litigation that may end up costing more than the amount at issue.
Consequently, it is very important, as either an attorney or a pro se litigant, to familiarize yourself with the types of forms and formalities involved in legal collections. The content of this blog post will enable you to better navigate the legal collections process in Florida successfully.