Claim of Exemption

debt gavel

Being sued by a creditor can be a scary and intimidating process, particularly for someone who has not had any contact with the legal system in the past. In fact, one of the most commonly asked questions that prospective clients in these situations ask is whether or not you can be sent to jail for not paying a credit card, medical bill or other similar debt. Rest assured, there is no debtor’s prison in the United States and you cannot be sent to prison or jail simply for failing to pay a credit card debt, past due medical bills and the like. That said, if you are being sued it is best to contact a knowledgeable attorney. The information below is not intended to replace legal consultation but is instead intended to provide an overview of the legal process and the protections that the law provides against collection activities.

The Process Of a Debt Lawsuit

A court case officially begins with the filing of a Complaint with the Court. The party filing the lawsuit is called the plaintiff and the person(s) being sued is called the defendant. In the case where someone is being sued for a debt, the plaintiff will likely request that the Court enter a judgment against you asking for the repayment of the underlying debt, plus any legal fees and costs incurred in prosecuting the lawsuit. After the lawsuit is filed, the plaintiff will then seek to serve you with a copy of the lawsuit so that it can represent to the Court that you are aware that legal proceedings have been filed against you. The plaintiff will likely hire a process server or the sheriff to serve you with copies of the court papers. If the plaintiff is unable to serve you personally with the court papers, the plaintiff may publish the lawsuit in the newspapers instead. The manner and nature of your response to the lawsuit depends on a wide range of factors and it is important to seek the assistance of an experienced attorney. It is especially important that you speak with an attorney as soon as you can after you are served because there are time sensitive deadlines and failure to comply with these deadlines can have a negative impact on your court case.

For the purposes of this article, lets us assume that all of the above has occurred and whether you did not appear or raised arguments that were ultimately unsuccessful, the court determined that you were liable for the amounts claimed as owed and the Court entered a monetary judgment in favor of the plaintiff.

What comes next?

Having a judgment entered against you is not the end of the story. In fact, it is only the first half of the book. After the entry of the judgment, the judgment-creditor will seek to exercise its post-judgment rights in an attempt to collect on the judgment. This may include wage garnishment, bank account garnishment, seizure of assets and so forth.

Exemptions in Florida

In Florida, the entry of a judgment does not mean that judgment-debtors are without any legal protection. These protections are called exemptions and are set forth in the Florida Statutes, specifically Fla. Stat. 77.041. Some of the most commonly used categories of exemptions are as follows:

  1. Head of family wages – The head of family exemption is available for an individual that provides more than one-half of the support for a dependent. There are specific income based considerations in the head of family exemptions. For head of family individuals with weekly net earnings of $750.00, your wages are protected so long as you provide more than one-half of the support for a child or other dependent. For individuals whose weekly income exceeds the $750.00, your wages cannot be garnished if you provide more than one-half of the support for a child or other dependent AND you have not agreed in writing to having your wages garnished.
  2. Retirement benefits – Funds that are being held in pensions, traditional, ROTH, SIMPLE individual retirement accounts, 401ks and other such qualified retirement accounts are protected from creditor claims.
  3. Social security, disability income and veterans’ benefits also have protection from creditor claims.
  4. Public assistance benefits, which includes welfare, food assistance, etc. are protected from garnishment by creditors as well.

The Florida Constitution also provides another very important protection from judgment collection activities. Homeowners are able to protect your homestead from most creditor claims.

It is important to note that successfully making a claim of exemption does not mean that the judgment is void or goes away forever. The claim of exemption only protects against collection activity for as long as the qualifying condition exists. What happens to the judgment? The judgment remains valid and continues to accrue interest until the judgment-creditor is subsequently able to collect or the judgment expires.

Of course, when it comes on to the matter of being sued, the best course of action is to get legal advice as soon as possible. This may prevent you from having to deal with a judgment and the garnishment that may subsequently occur. If you are being garnished and believe that one or more of the exemptions above applies to you, please contact our office as soon as possible so that we can take the necessary steps to protect your assets.

Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 1,800 homes from foreclosure, eliminated $100,000,000 in mortgage principal and consumer debt, and have collected millions of dollars on behalf of our clients due to bank, loan servicer, and debt collector violations, negligence and fraud.