Florida Debt Collection Laws – An Introduction
Many consumers in Florida find themselves at the receiving end of improper collection efforts, which is a violation of Florida debt collection laws. When the bank or creditor representing the bank utilizes an attorney to collect on a debt, such as an account stated or credit card debt, there are additional requirements that must be met as per the Florida Rules of Civil Procedure. For example, an attorney that misses certain deadlines as set forth under the Civil Procedure rules may forfeit rights to recover the debt via the court system.
Florida Statute Chapter 559 governs many of the debt collection rules for creditors trying to collect on a debt or obligation in Florida. The chapter requires creditors and others who attempt to collect on a debt or obligation from a Florida consumer to comply with the rules set forth in the statute. A common tool utilized by creditors or their attorneys are dunning letters – often these letters are sent in an effort to comply the relevant statute such that it appears that the creditor is complying with the rules prior to filing a lawsuit in Florida.
There are many other laws applicable to debt collection that can apply depending on the type of debt being collected. When a consumer files a bankruptcy petition , the automatic stay kicks in preventing any creditor action whatsoever. Florida Statute 222.25 protects abate property from being taken by creditors in order to pay debts owed by a debtor regardless of whether the debtor would otherwise be subject to a bankruptcy filing. The Fair Debt Collection Practices Act is a federal law that also applies to debt collection and governs debt collection by third party attorneys, collection agencies, etc., However, the Florida counterpart to the FDCPA contains many provisions that protect Florida consumers from illegal debt collection practices.
Florida statutes of limitations for collecting debt
Florida has statutes of limitations on debt based upon the type of debt you owe. The time frame can start as soon as the default happens or even sooner. Below are the statute of limitations on different types of debts:
Credit Card Debt
In most cases the statute of limitations on credit card debt is five years. This is a breach of contract action because the credit card company owes you the services and you owe them money in return. The "clock" for this statute of limitations starts running from the last payment you made. In other words, if you are making regular payments on the credit card and then stop, the statute of limitations will start running when the last payment was made. However, if you make that last payment on your credit card but are late it can be argued that they didn’t have notice of the default. As far as the borrow and sell context of a credit card a breach of contract is established when the funds are used.
Medical Bills
With medical bills the statute of limitations is typically five years as well. However, the statute of limitations starts running as soon as any services are performed and/or money is borrowed.
Bank Loans
The statute of limitations on bank loans is five years. With a bank loan the money is advanced then you must pay it back (this is not based on the borrow and sell context of a credit card). The "clock" starts running as soon as the loan is defaulted on.
Loans Between Friends/Family
This type of loan is exactly like a bank loan except with an informal loan relationship. The statute of limitations for this type of loan is also five years. The clock starts running as soon as there is default.
Mortgages
Mortgages have a statute of limitations of five years and for a reverse mortgage it is fifteen years. With a mortgage the "clock" starts running as soon as there is a default. On foreclosures the statute of limitations is twenty years following the final maturity date.
Promissory Notes
Promissory notes have a statute of limitations of six years. The "clock" starts running as soon as there is a default.
Easement Claims
The statute of limitations on easement claims is fifteen years. The "clock" starts running on this type of claim as soon as there is a trespass.
Protections Afforded to Consumers Under Florida Law
In addition to the well-established creditor rights statutes in Florida, there are also protections afforded to consumers under the Florida Consumer Collection Practices Act ("FCCPA"). The FCCPA was enacted to protect consumers from unfair, deceptive, and abusive actions by collection agencies and is designed to supplement protections afforded to consumers in the Fair Debt Collection Practices Act ("FDCPA"). While there are many similarities between the FCCPA and FDCPA, including definitions of commonly used terms, certain provisions of the FCCPA provide specific protections to Floridians that do not exist in the FDCPA.
The FCCPA specifically protects the consumer from representation by a debt collector that is known or should be known to be false, deceptive, or misleading. This ensures certain lawyers and law firms stay within the bounds of the law and treat Florida consumers fairly.
The FCCPA also makes it unlawful for any debt collector to use a number or address to communicate with a consumer or representative of a consumer that is known or should be known to be the number of place of employment of a consumer or representative of a consumer. For example, if your friends frequently share your financial problems with people at work or your work number is posted on the company-wide bulletin board, you can tell your creditor to stop the calls at your work and prevent them from calling you at that number in the future.
There are many other options afforded to consumers under the FCCPA but one of the most significant is the right to an award of reasonable attorney’s fees and costs for the successful prosecution of claims pursuant to the FCCPA. This means that most lawyers will handle FCCPA cases on a contingent fee basis and, even better, recover their fee from the creditor or debt collector instead of the consumer so the consumer completely avoids paying for the attorney’s fees and costs associated with the action.
While the FCCPA does not apply to creditors who are attempting to collect their own debts, it does apply to the employees, agents, and attorneys hired by a creditor to collect the debt.
Debtors’ rights under Florida law
Debtors in Florida have several legal rights under the Fair Debt Collection Practices Act and Florida law. Under the Federal Fair Debt Collection Practices Act, debtors can dispute a debt and request verification under 15 U.S.C. § 1692g. A debtor is allowed to dispute the validity of a debt within 30 days of receiving a written demand for payment. The demand for payment will often be the often first contact a debtor receives from a debt collector. If a debtor requests verification of the debt, the collection agency must cease all collection activities until the debt is verified and must also send the verification to the debtor.
If a debt collector has violated any state or federal laws regarding debt collection, a debtor can sue the collection agency under both state and federal law. Anyone who has been harassed or who believes they have been defrauded by a debt collector can file a complaint with the Federal Trade Commission or the Florida Attorney General. The Florida Consumer Collection Practices Act prohibits a debt collector from: Florida Statute § 559.72(9): "(9) . . . [c]ommit[ting] an act or omission prohibited by s. 501.204, regardless of intent, knowledge, or negligence." Florida Statute § 501.204(1): (1) ACTS PROHIBITED. A person may not engage in the following practices: (a) The intent, actually or by policy or procedure, or the effect of the act or communication is unconscionable in violation of s. 501.202. (b) The intent, actually or by policy or procedure, or the effect of the act or communication is a violation of any law, including, but not limited to: 1. A violation of chapter 501, relating to deceptive and unfair trade practices. 2. A violation of any other law setting standards of conduct for persons providing services or goods to the public. 3. A violation of any other provision of s. 501.173-501.178 or s. 559.551-559.785.
Penalties for violating federal and Florida debt collection laws
The consequences of violating Florida’s debt collection laws can be quite severe, subjecting violators to liability for actual damages, statutory damages, and attorney’s fees and costs. Violators are also subject to sanctions imposed by regulatory agencies.
Fraudulent misrepresentations can subject the debtor collector to liability for actual damages, which include out-of-pocket expenses and emotional trauma. Debtors are allowed to recover statutory damages for violations of certain consumer credit protection laws up to $1,000 for negligent violations and up to $5,000 for willful violations. In some cases, the amount is per violation while in others the damages are per action or debt. Statutory damages are intended to be a penalty in addition to the recovery of actual damages. If the debtor collector’s violations were considered "willful , " the creditor will also be responsible for any litigation costs and debtor attorney’s fees. Other types of violations carry their own additional penalties. Creditor fraud is generally punished with fines that can range from $5,000 to $250,000. Debtors have the opportunity to file both a complaint against the creditor with the Better Business Bureau (BBB) and report violators to the Federal Trade Commission (FTC). Additionally, debtors have the right under Federal and Florida law to pursue both an administrative complaint before regulatory agencies such as the Florida Department of Financial Services, as well as a lawsuit in civil court.
What to do if you receive a debt collection notice
Understanding Florida Debt Collection Laws and Statutes of Limitations
Receiving a debt collection notice from a bank or credit collector can be a nuisance. When you get behind on a payment or loan, a debt collection agency is often the next in line to follow up with you for payment. The Fair Debt Collection Practices Act (FDCPA) protects consumers from unfair debt collection tactics and requires that debt collectors keep their communications with you respectful and professional. If you have a dispute with a debt collector, talk to a Florida debt defense lawyer right away for guidance and support. If a debt collector comes after you for a past-due debt, respond as soon as possible. Give the agency a few weeks to make an initial attempt to contact you, but after that, it’s in your best interest to follow up with them. In your phone follow-up, calmly explain why you have not made payments on the debt to date. If you are interested in making an offer to pay less than the full amount owed, let the collector know the amount you are willing to pay. Just make sure that any payment arrangement you make is within your budget. Whatever you do, do not ignore the debt collection notice. Failing to do so could result in your account being sent to a law firm for a lawsuit. Keep a record of your communication with the debt collector. Track the date, time, and mode of contact (i.e. telephone, letter, etc.). Keep a record of what was said during the conversation (if a telephone exchange) and your responses. Also, keep all correspondence the debt collector sends you. In the event that the situation escalates into a lawsuit, you’ll want to have this information available for your Florida debt defense attorney.
When to Consider Legal Help for Your Debt Related Problems
There are many circumstances in which it may make sense to obtain the assistance of a qualified attorney with the right experience. Depending on one’s individual situation, and at what stage in the process they are at, hiring an attorney can be valuable to have the issues resolved as quickly and affordably as possible. For example, if you have not yet been served with a lawsuit in Florida, but have received nonstop calls from your creditor or debt collector, we would urge you to consult with an attorney as soon as possible. While they cannot sue you at this point, they still must adhere to laws like the Fair Debt Collection Practices Act ("FDCPA"). We often use our expertise to make the harassment stop, and to settle the debt on the best terms possible. In contrast, if you have already been served with a lawsuit and a default judgment obtained against you , hiring an attorney will be critical to resolving the issue. In fact, many people in this situation think the problem is impossible to fix, or just too late. However, in that scenario, even after the court has entered a judgment, there are many relief options that the lawyer can utilize depending upon the individual facts and circumstances. Finally, if you are facing an upcoming wage garnishment, bank levy, or other creditor collection activity, swift action by an experienced attorney can help you prevent major issues. Regardless of what stage of the process you are in, it pays to speak to an attorney about the matter. The Florida Bar and Florida Legal Help are both helpful resources to find a qualified attorney in your area, or you can contact us directly and we will be more than happy to assist.