When someone does not fulfill their monetary obligations with a creditor, the injured party may seek a judgment or lien in court against the faulty debtor. In other cases, the losing party in civil litigation may owe the prevailing party an amount of money plus interest. Furthermore, it’s crucial to understand all about creditor rights in Florida if you are undergoing a probate process, in order to pay the outstanding debt and complete the procedures in a timely manner. Keep reading our guide to learn everything about this topic.
Creditor Rights in Florida- The Essentials
Whether it is a probate process or the result of a civil litigation case, it is important to understand the reach and limitations of creditors’ rights in Florida. Below, find the most prominent examples.
Creditor Rights in Florida During Probate
When a Florida resident dies, the decedent’s creditors must be notified about his/her passing and that there is a probate proceeding in course. In such cases, the estate’s personal representative must provide notice to all known creditors of the decedent.
Plus, the personal representative must publish the notice to creditors in a circulating newspaper published in the county where the probate proceeding was established. The notice must circulate at least once a week for two consecutive weeks. On the other side, creditors cannot miss the opportunity to file claims against the decedent’s estate within the period available. State law provides that creditors have either:
- a 90-day period to file their claims against the decedent’s estate, counting from the first publication date of the notice in a local newspaper, or
- a 30-day period upon receipt of notice to creditors
Ultimately, the period to file a valid claim is determined by whichever event happens later. If a creditor fails to file a claim within the time limitation, the claims are forever barred by the court. Furthermore, the Florida Probate Code provides that all creditor claims against the estate filed more than two years after the decedent’s death are restricted.
Judgment Cases: What Are the Creditor Rights in Florida?
Florida law permits that creditors collect monetary damages awarded by a court through a judgment. Case law demonstrates that there is no judgment until the judge signs an official document literally entitled “Judgment” or “Final Judgment.” This document outlines the resolution of the issue litigated between the plaintiff and the defendant during the action. Once the creditor has access to the final judgment, it is possible to start the debt collection process.
However, debt collection cannot happen immediately after the judgment is issued. Instead, both parties to the lawsuit can request a rehearing during the ten days after the judgment’s date. Typically, rehearing requests are often denied, but if approved, the enforcement of the judgment must wait until the court adjudicates the rehearing motion.
It is crucial to understand that the final judgment document itself will not provide any money to the prevailing creditor nor seize any of the debtor’s property. Ideally, the debtor must voluntarily pay the owed amount in the judgment. Yet, if the debtor is either indisposed or unable to pay the judgment, Florida law provides a set of legal tools that permit a creditor to collect the owed amount from the debtor’s personal assets.
About the Florida Statues and Debt Collection
As provided by Florida Statutes §55, the execution of a judgment in Florida begins when the creditor asks the court to issue a document called “Writ of Execution,” which entitles the creditor to take specific action to collect the amount owed. Although Florida law provides effective debt collection tools, debtors must understand that the state will not impose criminal liability for a civil monetary judgment.
While the Writ of Execution is necessary to collect from the debtor’s assets, creditors do not necessarily need the document to utilize debt collection laws to gather information about the debtor’s assets or even attach one’s interests in specific assets. As established by Florida Statutes §55.081, a monetary judgment lasts for 20 years in Florida. The validity period of a judgment begins on the day of the judgment’s signature by the judge. Once the period is over, no creditor can take action on the judgment (Florida Statutes §95.11).
Ultimately, seeking expert legal advice to maximize exempt assets will certainly allow the debtor to leverage settlement possibilities and avoid worse situations (i.e., bankruptcy).
Florida Exemptions from Creditors – Discover the Limitations for Creditor Rights in Florida
Fortunately, there are several assets exempted from creditors, as Florida law makes them unavailable from the collection of monetary judgments. It is important to note that these statutory exemptions apply only to permanent residents in Florida. Hence, if a creditor obtains a judgment in another state against a person residing in Florida, it may be possible to enforce the judgment issued by the foreign court.
In this sense, it is not possible to export exemptions from creditors provided by Florida law to other state courts. Accordingly, property owned by Florida residents but located in other states is protected under Florida exemption. A non-exhaustive list of assets exempt from creditors in Florida include:
- Head of household wages (unless the protection is waived in writing by the debtor)
- Annuities, life insurance proceeds, and cash surrender value (even if the debtor has already received the money from the insurance policy or annuity)
- Homestead property
- Retirement accounts (e.g., IRA, 401k, pension, etc.)
- Disability income
- Social security
- Prepaid college funding
- Professionally prescribed health aids
- Hurricane savings accounts (with restrictions)
- Medical savings accounts
- Unemployment benefits
In Florida, state law allows debtors to waive any asset exemption in favor of a specific creditor. Lenders often include waiver provisions in the terms contained within loan documents. Hence, a debtor may unintentionally waive statutory asset exemptions provided by Florida law when signing a document to close a loan. Nonetheless, the enforceability of exemption waivers depends on whether the terms were not hidden from reasonable discovery using fine print. Ideally, borrowers must pay attention when reviewing loan documents to identify exemption waivers.
All About the Homestead Exemption and How It Affects Creditor Rights in Florida
Nationwide, Florida is arguably known as a debtor-friendly state. Besides the extensive set of legal tools which permit one to exempt assets from creditors, state law provides the strongest homestead exemption in the entire country. Undoubtedly, Florida homestead exemption is the most important asset exemption from creditors. Homestead property applies to the debtor’s primary residence, situated on up to 1/2 acre in a city and 160 contiguous acres in an unincorporated county, protecting it from liens and forced sales.
Besides the acreage limitation, state law does not impose a monetary cap on the homestead exemption. In Florida, the homestead exemption is a legal right provided by the state’s constitution. Accordingly, undoing Florida homestead exemption would require a full constitutional amendment, which is something much harder than repealing a state statute. Furthermore, as the Florida homestead exemption is provided by the constitution, no other law passed by the state may impact its enforceability.
Contact Us for More Information About Creditor Rights in Florida
Understanding creditors’ rights in Florida is a crucial step in different legal procedures, such as civil monetary judgments, probate, etc. If you want to avoid uncertainty and ensure full legal compliance, consult with an experienced attorney from Jurado & Associates, P.A. today.
Established in Miami, Jurado & Associates, P.A. has a team of well-versed legal experts to assist, guide, and represent you whenever it is necessary. Waste no time – contact us today by calling (305) 921-0976 or emailing Romy@juradolawfirm.com to schedule a consultation.