Florida Asset Protection : Asset Protection Law & Planning in Florida - Florida Homestead Exemption

In response to my statements on this Blog that most lenders do not pursue mortgage deficiency judgments, I received a email from an experienced collection attorney expressing a contrary opinion. The collection attorney (he did not giver permission to reveal his name) stated that he knows that lenders will be pooling mortgage deficiency judgments and selling them to collection companies for pennies on the dollar. Credit card companies have an established practice of selling non-performing credit card debt at seep discount. This same attorney says that many borrowers who walk away from mortgages will be in for a big shock in the future when collectors who have purchased the mortgage companies deficiency rights surprise the borrower with legal action.

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Mortgage deficiency judgments are main reason people express currently for seeking my asset protection advice. I have previously written on this Blog that most lenders do not pursue mortgage deficiencies and some of the reasons for this policy. I just recently spoke with an attorney who represents many mortgage lenders. He said that lenders continue to be inundated with foreclosures and are having difficulty managing the cases. None of the lenders he works for are pursuing deficiency judgments as a matter of course. Many lenders are planning to send 1099 tax forms to borrowers. The lenders file and send the 1099 forms to document their own tax loss. The borrower who receives a 1099 from a foreclosure must deal with its income tax consequences.

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Creditors cannot garnish wages of a debtor who is head of household in Florida. I am occasionally asked, as I was this week, whether someone who is facing a possible judgment from a court proceeding needs to file in the same court an affidavit that he his head of household in order to claim the exemption. The answer is "no." The law does not require such affidavit, and moreover, filing a affidavit will not suffice to protect wages from attempted garnishment.

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A caller stated he owned a piece of investment real estate in Florida when he was single. A creditor got a civil judgment against the caller and recorded the judgment in the county where the real estate was located. A title search showed the judgment as a lien on the property. The caller stated that he was about to get married and put his new wife's name on the title. He wanted to know if he could thereafter protect the property as tenants by entireties property.

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Florida statutes exempt disability payments from creditor levy. A caller asked if a lump sum disability payment is protected once deposited into the debtor's bank account. The Florida protection of disability payments most often is applied to exempt from garnishment continuous periodic payments under a disability income policy. The express language in Florida statutes does not protect proceeds of disability policies after receipt. I do not think that a lump sum disability payments would be protected after having been deposited in the debtor's bank account

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Judgments never go away. There is a 20 year statute of limitations for enforcement of judgments. Old judgments can come back to bite you. Take, for instance, the experience of a debtor who called me earlier this week who had a judgment entered against him in California in 1995. The debtor currently lives in Florida. She had heard nothing from the judgment creditor since 1995. Without warning, a couple week ago she found that writs of garnishment had been placed on all of her several bank accounts and brokerage accounts. All financial accounts were owned with her husband as tenants by entireties and were exempt.

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At least once a day someone calls me about problems they face paying one or mortgages on their Florida real estate. Many people ask if I could assist them, or at least advise them, in negotiating a work out agreement with their lenders. They assume their lenders will realize that it is better for the lender to adjust their mortgage payment schedule than to force the borrower into foreclosure. The unfortunate fact is that as a practical matter very few lenders will work out customized deal with mortgage borrowers. Some lenders will accept short sales for borrowers already in default, but otherwise, most lenders will not deal with borrowers individual financial situations and modification requests. The main reason for lender inflexibility was expressed in a Wall Street Journal article written by economist Martin Feldstein

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Some people have sent me emails asking how they can assert an exemption of their salary on the basis that they are head of household. Usually, these questions are sent by debtors owe money for general consumer debts such as credit cards or car repossessions. The readers typically want to know what they have to do to let their creditors know in advance that their wages are exempt from garnishment.

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