Collecting a Judgment? Exemptions Can Make it a Difficult Task
If you are collecting a judgment, or someone owes you money and you have a judgment for that money, you may think it’s an easy process to collect what you owe. But if you are going after an “average Joe,” that is, someone who is generally middle class, and may have some but not many assets, you will eventually find that collecting the money isn’t as easy as you thought it was.
Exemptions Protect Consumers
Just because someone has something—money in the bank or property—doesn’t mean that you can take it in order to collect your judgment. That’s because Florida law provides people who owe money exemptions. Exemptions are property or dollar values that are safe from and protected from, any collection action.
When you file an action to collect on a judgment, one thing you can do is try to get an order that automatically takes money from the debtor’s paycheck or which garnishes (takes from) the debtors bank accounts. But when you do that to collect a judgment, in response, the debtor will usually assert these exemptions, and a hearing will be held to determine if they are applicable.
Head of Household
One very commonly used exemption is what is known as head of household. So long as someone has dependents in their home who they support, and they make less than $750 per week, you cannot take their income or salary to collect your judgment. Even if they make more than $750 a week, you still have a problem, because only the amount that exceeds that $750 can be taken…and you can’t even take all of that money, because under federal law, no more than 25% of a consumers disposable income can be taken to collect on a judgment.
Those protections don’t just apply to regular continuing income, but also to any money in a bank account that represents previously earned income.
There are other exemptions as well. One well known one is homesteaded property. Yes, you can lien homesteaded property, but you can’t collect on that lien (i.e., foreclose on the home).
Even some personal property is exempt—between $1,000 and $4,000 worth of property, depending on whether the debtor has a homestead property or not. And the value of property is based on its current fair market value—think “ebay value.” So a debtor can “fit” (that is, protect) a good amount of personal property into even that limited personal property exemption.
There are other exemptions that a debtor can assert to avoid collection as well. Any money for domestic support, like alimony or child support, can be exempted. Social security income can be exempted. Pensions and prepaid college funds also cannot be collected, nor can proceeds from life insurance policies.
Collecting a judgment or need to sue to collect a debt? We can help. Call the West Palm Beach business lawyers at The Law Offices of Larry E. Bray today.