Florida provides excellent protection for collection against marital property by presuming that the property is held as tenancies by the entireties. Tenancies by the entireties means that property is held by husband and wife jointly with rights of survivorship of 100% of the property without the ability to sever the property. Therefore, a creditor cannot partition any part of the property. This allows a debtor to shield assets held jointly with a spouse. A creditor has the right to challenge the presumption but the burden is on the creditor to demonstrate that the property is not held as tenancies by the entireties to satisfy a debt due by one spouse.
When handling collections of debts, what would make my job a lot easier is if the debt itself was evidenced by writing. This could be in the form of an invoice, purchase order, promissory note, personal guaranty or contract. However, any written memorandum signed by the debtor will work. I have sued on handwritten notes more than once and have always been successful in obtaining judgments thereon. I have also sued successfully on checks evidencing payment on a portion of the debt. Therefore, my advice to everyone is obtain written evidence of the debtIn addition, the writing should include as many terms as possible. For example, a contract, purchase order or invoice should include the specific terms of payment as well as provisions for interest. My clients often want me to include a claim for interest. Right now, the legal rate of interest in Florida is roughly 4.75% per annum which is rather low. By specifying the interest rate to be applied in writing, you may obtain interest up to 18% legally per annum in Florida.
Collection against a limited liability company (LLC) in Florida has just become a little easier thanks to the revised statutes governing LLCs. Starting January 1, 2014, distribution to LLC members cannot be made if the result would be to leave the LLC insolvent and therefore, unable to pay its creditors. This allows creditors to be paid before the members may receive any distribution from the company and hopes to prevent distributions being made followed by dissolution of the LLC.
My firm was recently successful in collections by having a stock transfer from a husband to his second wife set aside as fraudulent. The husband was in a bitter divorce with his former wife and had many judgments entered against him in favor of his ex-wife. During the divorce proceedings, he remarried and transferred 50% of his ownership in his company to his second wife. As a result, we filed a motion to implead the second wife as a third-party defendant to have the transfer to her set aside, which the court granted. As long as a creditor has an outstanding judgment and files the requisite affidavit pursuant to the proceedings supplementary statute (Fla. Stat. §56.29(1)), the creditor is entitled to proceedings supplementary against any recipient of a fraudulent transfer from the debtor.
Collection of a judgment, I often tell my clients, is the hard part of the litigation process. Obtaining a judgment against the debtor can often be rather easy to achieve in litigation, especially when a debtor fails to respond to the lawsuit. The real challenge for a creditor and its attorney is attempting to collect on that judgment. Unfortunately, rarely does a judgment debtor receive the judgment and immediately send payment. Instead, the creditor needs to be prepared to chase that debtor to obtain payment.
I often get asked if its possible to collect on a judgment against a dissolved Florida corporation when the same principal has opened up a new company. If the new company is similar to the previous company, a judgment creditor can attempt collection in Florida against the new company under the legal theory that the new company is a "mere continuation" of the judgment debtor.
Garnishment is one of the most effective ways for a collections attorney to recoup funds for his or her clients. In the most recent legislative session, the Florida legislature has amended Chapter 77 of the Florida Statutes governing garnishment proceedings. The most notable change is that the amendment repeals Florida Statutes §222.12 which provided the procedure by which a creditor could challenge a claim of exemption as head of his or her household.
Welcome to my website blog. My goal is to address collection issues including collecting on unpaid invoices, accounts receivables, promissory notes and other debts. I will also highlight important changes in Florida law and notable cases. If anyone reading this blog has any specific questions, please feel free to e-mail me the question and I will try to address same.