My name is Ray LaBella and I am a Bankruptcy attorney. I wanted to spend some time with you to talk about exactly what creditors are allowed and aren't allowed to do when someone owes them money. One of the things I commonly hear when someone gets sued by a creditor is, ?can I go to jail?? Followed quickly by, ?do I have to go to court?? ?Can they take my home?? ?Can they garnish my wages?? and other questions. Let's crush some of these myths so that you can get a better idea of where you stand.



We'll deal with the most important question first, and the biggest myth out there. No, you cannot go to jail just because you owe someone money. There is no debtor's prison in the United States. Jail is only possible in these types of proceedings if you refuse to obey a court order and are held in contempt, and even then it is highly unlikely unless you don't behave yourself with the judge. The civil court cannot order you to pay a creditor back for a debt. It can order someone that owes you money to pay the creditor directly, but that's called garnishment and we'll talk about that in a minute. The only other possibility for jail is for criminal fraud, and that type of case is not handled through the civil court. Typically, you see these kinds of cases arise through identity theft, bad checks, and other such things, not merely failure to pay a credit account.

Once the debtor's liberty is no longer in danger, usually the next major concern is their house. Once again, there is good news with a couple of caveats. Under Florida Homestead law, generally only mortgage holders, taxes, and home improvement debts can actually carry the possibility of foreclosure of your homestead. Foreclosure is the process of forcing a homeowner to surrender their home. Credit card debts, auto loan deficiencies, health club memberships, none of those things can result in foreclosure. However, that does not mean that these creditors cannot sue and get a judgment from the court. A judgment is a declaration by the court that says the debtor actually does owe the creditor. That judgment can be recorded in the public records of the county and can act as a lien against any real estate in that county. If you own rental property, then it can be foreclosed, but not your home. Sometimes, lenders or title insurers will require that these judgments be paid before the debtor can sell or refinance their home. But, I am not going to get too far down this road, because books on books on books have been written about Florida Homestead and you probably don't have a few days to spend catching all of the fine points. In a nutshell, remember mortgages, taxes, and home improvement can foreclose, the others have to wait until you sell or refi, and then talk to an attorney.

The third most common myth is that creditors can't garnish wages in Florida. Here is the bad news. That is not true. Creditors can garnish up to the maximum amount allowed by federal law ? usually about 25% of the debtor's income after taxes ? on all debtors that are not head of family. Head of Family means that the debtor provides 51% or more of the support of a dependent, usually a minor/disabled child or elderly parent. However, the process is that the garnishment is served on the employer first and the employer starts withholding immediately. That money is placed aside until a court determines that the creditor is truly entitled to it. The debtor is sent a form which he/she can fill out and file with the court indicating whether he/she is exempt from garnishment. If that form is completed and filed by the debtor, then a hearing is set and the creditor and debtor go before the judge to determine if the debtor is Head of Family or otherwise exempt. If the debtor is Head of Family, then the employer returns the money, if not, then the money goes to the creditor. This is called a Final Judgment of Garnishment. The bad news is that it can take a few weeks to get this determination, so if you are running close to the wire for money, the disruption alone can have very bad consequences.

Wages aren't the only thing that can be garnished in Florida, though. Bank accounts are another common target for garnishment. Once again, if the only thing in your bank account is exempt wages, they should not be surrendered to the creditor, but they can be frozen until the court makes a determination at a hearing. So, the interruption in access to your money can be extremely inconvenient. If there is anything in your account that is not exempt, then that would be paid to the creditor. This kind of exposure is also why you should be careful about who you share bank accounts with. While the creditor can't take what doesn't belong to the debtor, it will take a court to decide whose money is whose, and in the meantime the account will be frozen and checks will bounce.

I hope that I've helped dispel a few common myths about debt collection and lawsuits by creditors. If you've run into a creditor that has decided to take you to court or garnish your money, be sure to call me. We can help. Remember, I'm pulling for you, we're all in this together.