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Debt Relief Services In Florida

Understanding Debt Relief Options

If you live in Florida and you are falling behind on credit card debt, medical bills, personal loans, or a car loan, you have more debt relief options than the ads suggest. When people search for “debt relief Florida,” most of what comes up is a national debt relief company selling one product: debt settlement. That can be the right fit for some people, but it is only one of six realistic paths, and each one carries a different cost, timeline, and credit impact.

Debt relief options are available to individuals who are struggling with unsecured debt, such as credit card debt and medical bills. It’s essential to understand the pros and cons of each debt relief option before making a decision. Debt settlement, for example, can have a negative impact on your credit score, but it can also provide a fresh start for individuals who are struggling with debt. Debt consolidation, on the other hand, can simplify debt payments into one payment, but it may not always reduce the balance owed.

Debt Relief Services In Florida

What are my debt relief options? When you reach a point where you know you are having trouble with your debts, how do you figure out which option is right for you, and how do you compare risk, time, out-of-pocket, and short term/long term credit impact?

There are a number of different debt relief options, and they span the spectrum from low-risk, low reduction in payment, as compared to higher risk but in some instances higher reduction in payment. It’s important to review all of your options and see how they fit into your financial situation. Debt settlement, for example, can reduce the number of interest payments needed to pay off debts by negotiating with creditors to alleviate the financial burden associated with high interest payments.

Page Contents

Summary of Debt Relief Options for Individuals:

  1. Request an interest rate reduction from existing credit cards
    • Positive:
      • No credit impairment
      • It’s easy
      • If your debt isn’t too far outside of your budget, this can be enough to get the balances under control
    • Negative:
      • No change to balance
      • Not a huge difference in monthly payments
  2. Refinance debt with a new lender (aka “debt consolidation loan”)
    • Positive:
      • No credit impairment
      • Usually you are reducing the interest rate on the debt
      • Puts several debts into a single payment
    • Negative:
      • Often not an available option if debt is already behind
      • No debt reduction
  3. Debt Settlement – creditor agrees to pay off a debt for a reduced amount
    • Positive:
      • Close out the debt for a reduced amount
      • Credit impact is better than non-payment
    • Negative:
      • Have to be cautious about terms of settlement
      • Should make sure you aren’t paying on an uncollectible debt
      • Not as good for credit as paid in full
      • Debt settlement can have tax consequences.
  4. Debt Management Plan or Debt Consolidation Program – make one monthly payment to an agency or company that handles several debts for you.
    • Positive:
      • A nonprofit credit counseling plan can lower interest rates and roll multiple debts into one payment
      • Someone else handles the creditor calls and the payment schedule
      • Payments are designed to be in your budget.
    • Negative:
      • A true debt management plan usually repays the full balance owed, just at lower interest
      • For-profit “consolidation programs” are often debt settlement under another name, with the same risks
  5. Chapter 7 Bankruptcy
    • Positive:
      • Get rid of your debt with no payment plan.
    • Negative:
      • Have to meet certain qualifications
      • May not qualify if your household income is too high
      • May have to give up “extra” assets as trade off for eliminating debt.
  6. Chapter 13 Bankruptcy
    • Positive:
      • Get rid of your debt with a payment plan designed to be in your budget
      • Can file even if over the income qualification for Chapter 7
      • Can keep the assets you may otherwise have to give up in chapter 7
    • Negative:
      • 3-5 year commitment.

Here we will break these options out into a little more detail:

The Low Impact Debt Relief Options:

1. Request an interest rate reduction from existing credit cards

This is a great place to start, particularly if you are still up to date. It won’t make a huge difference in monthly payments, but reducing the interest rate can mean a real reduction in your out of pocket over the course of time. Like Wayne Gretzky said, “You miss 100% of the shots you don’t take.” There is no harm in calling your credit card companies to ask if they will reduce your interest.

2. Debt Refinance / Debt Consolidation Loan

If you have a number of debts, this can be a good option to simplify what you owe to a single payment, as well as to hopefully reduce the interest rate. There is no adverse credit impact and no litigation risk. However, be cautious that you do not fall into the “rob Peter to pay Paul” trap. Don’t refinance your loans just to build the balance back up on the accounts you pay off. That will quickly put you into debt quicksand, building the balances up beyond what you can handle.

The Medium Impact Debt Relief Options:

3. Debt Settlement

If you have been behind for a period of time, it can be possible to settle on your debts. Debt settlement can help manage and eliminate outstanding debt by negotiating a reduced payoff amount. While sometimes, this can present an opportunity to pay off a balance for a reduced amount, it can also present some added risks. First, by virtue of being behind, it is possible that the company collecting on the balance may file a lawsuit. Second, you have to make sure that any settlement offer is legitimate – that it is from a company authorized to make the offer, and that the deal is what they say it is. You also should make sure that it is still a valid debt, and that it isn’t too old to be collectible. Finally, settled debt can have tax consequences. When a bank, credit union, or other lender forgives $600 or more, it is generally required to report the canceled amount to the Internal Revenue Service, usually on a Form 1099-C (26 U.S.C. § 6050P). Forgiven debt can count as income unless an exclusion applies; two common ones are being insolvent at the time of the settlement and having the debt discharged in a bankruptcy case (26 U.S.C. § 108(a)(1)). Talk to a tax professional before you agree to a large settlement so the savings are not eaten up by an unexpected tax bill.

If a debt is already in a lawsuit or a judgment has been entered, it can still be possible to settle on the debt. If this is the case, you should really consider getting professional assistance.

4. Debt Consolidation / Debt Management Plan

These two terms get used loosely, so it helps to separate them.

A debt management plan is usually run by a nonprofit agency that offers credit counseling services. You make one payment to the agency each month, and it pays your credit card companies on a set payment schedule, often at lower interest rates the creditors have agreed to. You generally still repay the full balance owed, so it works best when the problem is interest rates and monthly payments, not the size of the debt itself. Plans commonly run three to five years, and enrolled cards are usually closed.

A debt consolidation program sold by a for-profit debt relief company is often debt settlement under another name. You stop paying your original creditors and instead make monthly payments into a dedicated account; once enough builds up, the company tries to negotiate lump sum payoffs. The risks are the same as debt settlement: late fees, collection calls, and a possible lawsuit while the money builds. Under the FTC’s Telemarketing Sales Rule, a debt relief company selling its service by phone generally cannot collect its fee until it has actually settled or changed at least one of your debts and you have made at least one payment under that deal (16 C.F.R. § 310.4(a)(5)). A company that asks for large fees up front is a red flag. If the professional assisting you is a lawyer, you also have someone who can respond if a creditor sues.

The Higher Impact Debt Relief options:

5. Chapter 7 Bankruptcy

In many instances, Chapter 7 is the fastest and least expensive option to wipe the slate clean. Having a debt lawyer can provide crucial assistance to navigate the complexities of debt-related court proceedings, defend personal rights, and challenge unlawful practices employed by debt collectors. Chapter 7 is known as the “liquidation” chapter of bankruptcy. In order to file Chapter 7, there is an income qualification. Additionally, the trade-off in chapter 7 is that in exchange for wiping out your debts, you are limited on the assets you can keep. Chapter 7 will have a negative impact on credit, but it also zeroes out the discharged balances on a credit report, which often allows filers to build their score back up faster than they otherwise would if the accounts just stayed on the report. Usually Chapter 7 is a helpful option for those who have issues with unsecured debt.

6. Chapter 13 bankruptcy

Chapter 13 is known as the “reorganization” chapter of bankruptcy. In a nutshell, it takes all of your debts and puts them into a payment plan that lasts between 3-5 years. The plan is based mostly around what the filer can afford. If the debts are not paid in full by the end of the plan, the balance is usually discharged (except student loans, which seem to be able to survive a nuclear holocaust). Chapter 13 is a good option if you are behind on secured debts (your mortgage or car loan) and you want to keep them.

So what debt relief option is right for you? You guessed it – it depends on your circumstances. Our attorneys focus on consumer debt problems: lawsuits, bankruptcy, credit reporting errors, and collection harassment. Call (727) 538-4188 or schedule your Free Debt Freedom Strategy Session (a free consultation with an attorney) to explore your options and find an affordable way to regain control of your debt.

Florida Laws That Protect You While You Sort Out Your Debt

Florida residents have more protection than many people realize, and knowing the rules changes which debt relief solutions make sense.

Old debts have deadlines. Under Florida statute § 95.11, a creditor generally has five years to sue on a contract founded on a written instrument, four years on an obligation not founded on a written instrument (such as many store accounts), and three years to sue on certain hospital medical debt, measured from when the hospital refers it to collection. A Florida court judgment, on the other hand, can be enforced for up to 20 years. Which period applies to a particular credit card debt depends on the paperwork, and the deadline is a defense you have to raise in court; it does not erase the debt on its own. Federal rules also bar a debt collector from suing or threatening to sue on a time-barred debt (12 C.F.R. § 1006.26). Before you pay or settle an old account, have it checked; paying on an uncollectible debt is money you may not have needed to spend.

Collectors have to follow the rules. Florida’s Consumer Collection Practices Act (Fla. Stat. § 559.72) applies to anyone collecting a consumer debt, including original creditors, not just collection agencies. Among other things, a collector may not call you between 9 p.m. and 8 a.m. without your consent, may not contact your employer before getting a final judgment (unless you gave written permission or acknowledged the debt in writing after it was placed for collection), and may not keep contacting you once it knows you have an attorney for that debt. The federal Fair Debt Collection Practices Act separately bars third-party debt collectors from falsely implying they are with the government or that you will be arrested for not paying (15 U.S.C. § 1692e).

Some debts survive almost every option. Not all debts can be settled or wiped out. In bankruptcy, domestic support obligations such as child support and alimony, most student loan debt, many recent tax debts, and most government fines are generally not discharged (11 U.S.C. § 523(a)). Mortgage debt and a car loan are secured debts, so the lender can still take the property if the payments stop, even after the personal obligation is discharged. And before anyone can file bankruptcy, the law requires a credit counseling briefing from an approved nonprofit agency within the 180 days before filing (11 U.S.C. § 109(h)).

How to Check a Debt Relief Company Before You Sign

Most programs advertised as a “Florida debt relief program” are private companies, not a government program. Before you enroll with any debt relief company, ask:

  • What exactly will you do with my money? Get the plan in writing, including whether you will be told to stop paying your original creditors.
  • When do you get paid? Large fees charged before any debt is settled are a warning sign.
  • What happens if a creditor sues me? A non-lawyer company cannot appear for you in court, and a lawsuit has a short deadline to respond.
  • What will this do to my credit report? Missed payments and settled-for-less accounts both show up.
  • Is there a cheaper path? If you have too much debt for settlement to make sense, bankruptcy may cost less and finish faster. If the problem is mainly high interest, a debt consolidation loan from a credit union or a nonprofit debt management plan may be enough. Compare interest rates and origination fees on any personal loan before consolidating debt.

You can look up complaints about a company with the Florida Attorney General’s Office and the Better Business Bureau. And if you are already being sued, talk to a lawyer before signing up for any program; a lawsuit has deadlines that a settlement company will not track for you.

Working with a Debt Settlement Attorney

Working with a debt settlement attorney can be beneficial for individuals who are struggling with debt. These attorneys have experience negotiating with creditors and can help individuals achieve a favorable debt settlement. Debt settlement attorneys can also provide legal representation and protect individuals from debt collectors and credit card companies.

When working with a debt settlement attorney, it’s essential to understand the debt settlement process and what to expect. The debt settlement process typically begins with a consultation with the attorney, during which the individual’s financial situation is assessed, and a plan is created to negotiate with creditors. The attorney will then contact the creditors and negotiate a lump sum payment or a payment plan that is acceptable to both parties.

It’s also important to understand the fees associated with working with a debt settlement attorney. Some attorneys may charge a flat fee, while others may charge a percentage of the debt settled. It’s essential to ask about fees upfront and to understand how they will be paid.

Frequently Asked Questions:

What is debt relief?

Debt relief is the set of options that are available to someone who is overwhelmed by their financial obligations. It helps you to get on track within your budget. As discussed above, there are a variety of options that might apply depending on circumstances, such as debt settlement, chapter 7 or chapter 13 bankruptcy, or a payment plan.

What is a debt relief agency?

As the term “debt relief agency” is commonly used, a debt relief agency is any entity that provides assistance to get out of debt. The term is also used under the federal bankruptcy code in 11 USC 101(12). Under that definition “The term ‘debt relief agency’ means ‘any person who provides any bankruptcy assistance to an assisted person in return for the payment of money or other valuable consideration, or who is a bankruptcy petition preparer…’ subject to certain limitations.

How does debt relief work?

The process for debt relief starts with assessment. We evaluate your situation and work with you so that you can determine the option that is in your best interest. From there, depending on what option you elect, we generally get some information from you, and take action to address your debt. The execution process will vary depending on the option you choose.

How does debt relief affect your credit?

For someone who can no longer afford their payments, their credit score will progressively get worse with each month that shows an outstanding balance and another missed payment. Usually, a credit score will get worse during debt relief options; but the goal is to resolve the debt in a way that you no longer owe anything so your credit score can get better again. Credit scores vary significantly based on personal circumstances, and no one can promise a particular result, but generally we find that consumers are able to recover credit scores to healthy levels around 2 years after the conclusion of the debt resolution. Most clients we work with have the option to purchase a vehicle almost immediately after the debt relief is complete (although may be subject to more aggressive interest rates) and usually can get a credit card within a year. If you’d like to learn more about home mortgage timelines, click here.

How do I get debt relief?

The path to debt relief starts with knowing what option is right for you. With a consultation from an experienced attorney, you can decide whether debt settlement and consolidation, chapter 7 bankruptcy, chapter 13 bankruptcy, or another alternative is appropriate for you, as well as what your expected cost may be. Once you determine your path, we can map out the process to get debt relief.

Debt collectors are harassing me and will not leave me alone. Is there anything I can do?

Especially when you do not have an attorney, Debt collectors know that you likely do not have negotiating experience and probably do not understand bankruptcy and debt relief law. Therefore, if you do not have an attorney, they will use this against you. However, it is important to know that you have rights and when you work with our attorneys, we will help get you out from under the thumb of debt collectors.

What if I want to negotiate with creditors without the help of an attorney?

You are legally allowed to do this if you would like to. You are not required to have the help of a Clearwater, Florida debt relief law firm. However, we believe that we can be a valuable asset to you during this time because we can negotiate with creditors on your behalf and have done so for our clients many times.

When is the Debt Settlement Process Right For You?

When you want debt relief, you may want to learn more about debt settlement. Also known as debt negotiation, this is the process where your attorney can work to not only reduce the total amount you pay on your debt but also allow you to pay it all in one lump sum. If this is not possible, you can speak with your attorney about paying it off in multiple payments, though this is not as common. You may be wondering why a creditor would be eager to settle your debt instead of letting interest continue to increase. The truth is, when you get into debt this bad, most creditors know that you will not be able to dig yourself back out. At that point, interest earned won’t matter if you declare bankruptcy. However, if you and your attorney argue for a settlement, it is better for them to get a lower amount than risk getting nothing if you go bankrupt.

Why doesn’t everyone choose to settle their debt?

Debt settlement is not as simple as asking for a lower payment. You must speak with your attorney candidly when it comes to how you got into this debt. You want to show that you have had a financial hardship that has made it impossible for you to pay your debts.

A debt collector implied that they could arrest me or that they work for the government. What if this isn’t true?

Call us immediately if you have been speaking with a debt collector who has wrongly implied that they work for the government and can arrest you, or someone who has made threatening statements to get you to try and pay your debt off. Debt collectors can get in contact with you to speak about your debt but they cannot make threats and they cannot provide false information to try and get you to pay off your debt.

What else should I look out for when a debt collector calls me?

When a debt collector calls you, they should always identify themselves and which company they are with, they should never physically or verbally threaten you, and they cannot advertise the debt you are in. When you get off the phone with them, you should take notes of anything unusual or suspicious that occurred when you talked with them and speak with your lawyer about the conversation.

How can negotiating my debt help?

When you are wondering if you should have a debt relief lawyer, you may be wondering what the advantages are. Many people who are in debt may think that hiring an attorney to help them is more trouble and cost than it is worth. However, you may find that your debt relief attorney can take a great burden off of you and will be able to help you successfully negotiate with creditors and credit agencies. If you want to learn more about how we can help you with debt relief, contact our office to set up your first appointment. We want to help get you out of debt as quickly as possible so that you can move on with your life.

There are many people who are not in a position in which their debt is so bad that they need to file for bankruptcy to cover it or erase it. In fact, a large portion of people in debt still have jobs but are just barely able to cover their bills and payments every month. This means that while you may not be missing a payment on everything, some bills begin to add up month after month and you are unable to keep your head above water. When this happens, negotiating your debt may be the right option for you. Your attorney can:

  • Validate the debt you owe. When it comes to asking you to pay a debt, creditors often have no shame in harassing you or making you feel like you owe more than you do. Your debt relief attorney can make sure that you have the information of the person and company reaching out to you about the debt as well as the precise amount you owe and what the interest rate is.
  • Write a cease and desist letter. Your attorney can help stop the collectors from calling and can make sure that future calls go through them, not directly to you.
  • Go through the negotiation process. As noted above, the higher your debt is, the more the creditors will want to negotiate your debt. If you get into a place where you are unable to pay and must declare bankruptcy, they will not see the money you owe them. Instead, when your attorney negotiates payment with them, they know they have a higher likelihood of getting paid.

Why are you different from other debt relief agencies?

We are different from other debt relief agencies for a few reasons:

  1. Debt problem solving is the core of our practice. Our consumer attorneys concentrate on helping people with debt problems: debt lawsuits, bankruptcy, credit reporting errors, and collection harassment.
  2. We are a law firm! While many non-lawyer national companies offer debt settlement services, they can’t help you in court, they can’t tell you your legal rights, and they can’t protect you if creditors break the law.
  3. We look at debt problem solving through many different lenses. Unlike many other law firms, we don’t just file bankruptcy, we also settle debts and we sue lenders in some instances, allowing us to look at each situation from a variety of angles.

Questions? Call (727) 538-4188 or schedule your Free Debt Freedom Strategy Session.

 

Compare Your Options in More Depth

This page is general information, not legal or tax advice. For Florida residents, contact Ziegler Diamond Law at (727) 538-4188 for a Free Debt Freedom Strategy Session.

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