Florida Debt Settlement Regulations
It is no secret that consumer credit is an important aspect of the U.S. economy. Credit allows consumers to improve their standard of living and pay for the upgrade over time. However, many creditors in Florida and other states have extended more credit to consumers than they are able to pay. In other instances, an individual\’92s income has changed after already receiving credit. A number of other factors may also lead to non-payment of credit, including divorce, family medical emergencies and simple overspending.
When consumers are unable to pay their debts, it can greatly affect their lives. Many people become desperate in an attempt to pay their debts and repair their credit score. Debt relief companies have sprung up in Florida and across the United States offering to help people solve their credit problems through credit counseling and repair, debt management and debt settlement. Some of these companies are legitimate, but others are predatory and leave consumers in a worse situation than before.
In order to protect consumers, both federal and state governments have drafted specific laws in order to regulate debt settlement organizations. The laws regulating debt relief differ in each state. Florida debt settlement laws are meant to complement federal laws. Although no specific state agency is charged with regulating debt relief organizations, state attorneys and the Florida Department of Legal Affairs take unfair practices in debt relief very seriously. Specific Florida debt settlement laws are as follows:
Florida Deceptive and Unfair Trade Practices Act
This Florida law does not specifically cover debt settlement companies, but it does protect consumers from a wide range of unfair business practices, including unfair competition, unconscionable acts and deceptive practices. Those found to be in willful violation of the law must pay all damages to the affected consumers and a civil penalty of up to $10,000 per violation. Proceedings may be initiated under this law by a state attorney, the Department of Legal Affairs or the consumer.
Regulation of Credit Counseling Services and other Debt Management Services
This law regulates any business conducting credit counseling, money management or debt reduction services for which consumers pay a fee. The maximum fees these organizations may charge consumers is prescribed by Florida Statue 817.802:
– For an initial consultation, the maximum fee is $50.
– Fees for subsequent consultations may not exceed $120 per year if no other services are provided.
– If debt relief services are provided, consumers may not be charged more than $35 per month or 7.5 percent of their monthly debt payments, whichever is greater.
Violations of this law are considered third-degree felonies, and consumers may recover all damages incurred plus attorney fees.
Regulation of Credit Service Organizations
If a debt relief company offers credit rating repair services, they are considered a credit service organization (CSO). In Florida, a CSO may not collect payment for credit repair services prior to completion of the services unless a surety bond has been posted in the amount of $10,000. Contracts for credit repair services must also include a 5-day cancellation clause whereby the consumer may end the contract without cause or reason.
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