Florida Payday Loans Statute of Limitations to Collect

Under Florida law, a consumer can only be sued for an outstanding debt for a set period of time. The exact amount of time a creditor has to sue a debtor will depend on the type of debt the person has taken out. In the case of payday loans, which are secured by a written contract, the creditor has five years to sue the debtor for repayment of the debt.

Payday Loans

A payday loan is a type of unsecured loan. Typically, payday loans are short term --- in Florida, they must be repaid within a month --- and carry high rates of interest. A payday lender requires all borrowers to sign a contract agreeing to pay back the loan within a certain period of time. If he doesn't the borrower will be held liable for the debt and can face a lawsuit in court.

Debt Collection

While a payday loan lender can attempt to collect the debt by contacting the debtor and reminding him of his obligation, he cannot undertake more aggressive methods until after a judge has awarded him damages in court. This can only be done if the lender files suit alleging that the borrower hasn't paid the amount that he was contractually obligated to. This lawsuit must be filed, but not necessarily won, before the statute of limitations has expired.

Statute of Limitations

In Florida, all creditors must file lawsuits for any uncollected debt that stems from a written contract within five years from the date in which the debt went bad. This means the five-year period starts the day the borrower missed his first payment on the debt. After the five-year period has elapsed, the borrower still technically owes the payday lender the money, but it may be difficult to collect.

Considerations

If a creditor does win a lawsuit against the payday borrower, then the creditor will be awarded what is known as a "legal judgment" in his favor. This legal judgment has a different statute of limitations for its collection. In some cases, a judge may be willing to extend this statute of limitations past its deadline. It is rarer for a Florida judge to extend the statute of limitations on the filing of a lawsuit over a written contract.

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Minnesota's Statute of Limitations on Debt

Valid contracts are upheld in a court of law. To ensure that creditors are not suing for stale debts, Minnesota has developed statue of limitations on all debts. Depending on the debt, the statue of limitation will differ.

Account Types

The law recognizes three types of debts: contracts, promissory notes and open-ended accounts. Contract agreements can either be written or oral. Verbal contracts are legally binding but tough to prove in court. Promissory notes and written contracts are similar except promissory notes indicate the scheduled repayment plan and interest paid. For example, a credit card agreement would be a written contract and a mortgage would be a type of promissory note.

Beginning of Statue of Limitation

The statue of limitations begin on the date a payment was due. When payments are not received according to the repayment terms, the creditor can start a cause of action against the debtor.

Statue of Limitations

In Minnesota, a person has up to six years to sue for an oral debt. Written contracts and promissory notes have a six-year limitation. Open-ended account debts are considered stale after six years of inactivity.

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How to Stop Foreclosure and Consolidate Credit Card Debt

Avoiding foreclosure while consolidating credit card debt is tough to do all at once. It's likely your credit score has already taken a beating if your house is nearing foreclosure, making it impossible to be approved for a debt consolidation loan at a reasonable interest rate. Potential creditors will see from your credit report that you have been missing mortgage payments, and that you may have a problem with credit card debt as well. Despite that, you can consolidate the credit card debt and avoid foreclosure with the help of reputable credit counseling.

Instructions

1

Schedule a meeting to discuss foreclosure and credit card debt with a nonprofit credit counselor certified by the U.S. Department of Housing and Urban Development. The counselors specialize in foreclosure avoidance and debt management. The Federal Trade Commission strongly recommends that you seek the advice of nonprofit counselors and avoid for-profit companies, especially those marketing solutions for foreclosure avoidance. Nonprofit counselors are available in virtually every community. Find a counselor near you by checking the HUD website.

2

Gather information needed to provide the credit counselor with an accurate view of your financial situation, including a recent pay stub, a copy of your mortgage agreement and card card statements. Also create a list of all other monthly expenses including groceries, cable television and transportation costs. Document every thing you spend money on so that the counselor can recommend a budget that will be helpful during a three-way discussion with your mortgage company and with credit card companies.

3

Review your budget with the counselor to identify possible savings, such as eliminating cable television or taking public transportation. Then ask about options for consolidating the credit card debt. With a likely poor credit score your best option may be debt management plans, which are offered by credit counseling agencies. For a monthly management fee the counseling agency will contact all your credit card companies to negotiate lower monthly payments and lower interest rates. You must agree to remain in the program for four or five years and to send the counseling agency a lump sum check each month covering at least the minimum payments on all your cards combined. This effectively creates credit card consolidation without taking out another loan. Ask for details about a debt management plan and enroll to consolidate the credit card debt.

4

Ask the counselor to contact your lender with you on the phone to discuss stopping the foreclosure. You should start the conversation by telling the lender you are getting your finances under control with the help of a government-certified credit counselor. Then have the counselor describe your progress, including a new household budget and a debt management plan to consolidate credit card debt.

5

Negotiate a suspension of the foreclosure proceedings by asking the lender for time to present printed documentation about the debt management plan and your new household budget. Follow up as promised and permanently end the foreclosure with the counselor's help as you negotiate with the lender for a solution such as loan modification, which allows the lender to change any or all of the terms of the loan to make it more affordable. Other options include forbearance, which allows your missed payments to be tacked onto the end of the loan, or a payment plan for paying a little more each month until the mortgage is current. Get all the details of an agreement in writing.

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What Is a Debt Buyer?

If you stop making punctual payments to a creditor, your account is no longer a profitable asset to the company. Unless you make payment arrangements with your creditor, the company will eventually transfer or sell your account in order to remove the debt from the company's financial books. Creditors typically sell uncollectible accounts after 180 days.

The Debt Buying Industry

A debt buyer is any third-party company that purchases unpaid consumer debts from another creditor. Unlike some collection agencies, debt buyers do not maintain an agreement with the creditor allowing them to keep a percentage of the total amount recovered. Because the debt buyer owns the debt, it keeps 100 percent of whatever it collects from the debtor. Debt buyers make a profit by paying the creditor far less for the account than the debt is actually worth---sometimes mere pennies on the dollar. The creditor benefits because the account no longer represents a total financial loss for the company.

Collection Rights

By purchasing a debt, the debt buyer acquires the same collection rights the original creditor previously possessed---including the right to sue the consumer. The debtor, by contrast, no longer owes the debt to his original creditor and must make any future payments to the debt buyer. Although all debt buyers' policies differ, collectors typically use telephone calls, settlement offers and collection letters to recover unpaid debts. Should a debt buyer sue an individual and win, it gains increased collection ability that may include garnishment rights and the ability to place liens on property the debtor owns.

Credit Reporting

Like many original creditors, debt buyers send periodic reports to the credit bureaus. A debt buyer's report appears on a consumer's credit file as a collection account. Collection accounts have a damaging effect on debtors' credit scores. The Fair Credit Reporting Act (FCRA) requires the credit bureaus to automatically delete collection accounts 7.5 years from the date the debtor stopped making payments to the original creditor.

Debt Recovery Laws

In response to repeated consumer complaints of harassment from debt buyers and other collection agencies, the government passed the Fair Debt Collection Practices Act (FDCPA) in 1978. The FDCPA contains the rules companies must follow when collecting debts and only applies to third-party collectors, such as debt buyers. According to the FDCPA, debt buyers cannot harass debtors by making threats they cannot legally enforce, using profanity or informing anyone other than the debtor about the collection account. Consumers can sue debt buyers that violate their rights under the FDCPA.

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Laws on Subpoena Duces for Deposition for Credit Card Debt in Florida

If you have been sued for an unpaid credit card debt, you may receive legal documents with strange-sounding names, such as a "subpoena duces tecum for deposition." A subpoena duces tecum for deposition is a notice to appear to give deposition testimony, and to bring certain documents with you when you go. Translated literally from Latin, "subpoena duces tecum" means "under penalty to bring with you."

Subpoena

The Florida Rules of Civil Procedure regulate subpoenas in Florida civil litigation, such as a lawsuit to recover credit card debt. According to the rules, the lawyer for the credit card company can issue a subpoena requiring you to appear at a deposition. He must provide you with a notice that specifies the time and place for your testimony and must provide a list of the documents that he requests that you bring to the deposition. The subpoena will ask you to produce the documents so the credit card company can inspect and make copies of them.

Objections

The Rules of Civil Procedure include a process for objecting to the subpoena before the deposition takes place. If you object to producing any of the requested documents, you may prepare and serve a written objection on the credit card company. You must object promptly -- within 10 days as of the time of publication, less if the credit card company served the subpoena less than 10 days before the deposition is scheduled to take place. If you object to producing documents, you do not have to produce the documents that you objected to producing unless the credit card company gets a court order requiring you to provide them.

At the Deposition

You may also object to questions that the credit card lawyer asks you at the deposition. The lawyer who represents the credit card company may ask you questions likely to lead to evidence about the case against you and about the documents you brought with you. If the lawyer asks you deeply personal or embarrassing questions, under the Florida deposition rules, you may make a motion to end the deposition or to limit the questions the lawyer can ask you if the question are unreasonable and the lawyer asks them to annoy, embarrass or oppress you.

Consequences of Noncompliance

The consequences for disobeying a subpoena are severe. Unless you have a good reason for not appearing at your deposition and not bringing the requested documents, you must attend. If you don't attend, and if the court decides you didn't have a good reason for not attending, you may be held in contempt of court for failing to comply with the subpoena.

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Tax Consequences of Defendants Offering Settlement Agreements

Offering a settlement to end a debt lawsuit helps the defendant in the case avoid a possible court judgment. Settlements usually take place out of court and can result in significant savings for the defendant. For example, a debt collector collecting on an unpaid credit card debt may settle for as little as 20 percent of the balance, although the range is usually 20 to 70 percent, according to SmartMoney. Whatever the percentage, tax consequences could add significantly to the overall cost of the settlement.

Considerations

The Internal Revenue Service usually treats savings realized through debt settlement as income. A defendant settling a $15,000 credit card debt may pay only $3,000 through the settlement, but in most cases the IRS would consider the $12,000 in savings as income.

Exceptions

Not all settlement activity presents tax consequences. People file lawsuits for numerous reasons, such as disputes over property lines. Tax consequences during settlement usually becomes an issue when the plaintiff in the case, such as a credit card company, agrees to cancel debt as part of the agreement.

IRS Form

The IRS usually requires that debtors file a special form for all debt settlement resulting in savings of $600 or more. Creditors and debt collectors agreeing to settlements send debtors an IRS 1099 form in January. The form, titled "1099-C, Cancellation of Debt," outlines the financial terms of the settlement. Debtors who fail to include the form with their tax return are subject to penalties. Creditors and debt collectors send the forms in January, with a copy sent to the IRS.

Exemptions

Debtors who have more debts than assets at the time of their settlement are eligible for an IRS exemption and do not have to report debt settlement savings as income. Having more debts than assets means a person is financially insolvent. A tax adviser can help a defendant determine insolvency according to the IRS guidelines.

Decisions

Debt settlement is usually a good deal for the defendant even with tax consequences. A 1099 filing could result in a higher tax bill, but a defendant paying $3,000 to settle a $10,000 credit card debt is likely to realize a savings overall even after the tax consequences. Allowing the case to reach a judge and receiving a possible settlement could lead to a court judgment for the entire amount.

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How to Answer a Court Summons for a Collection Account

Finding out you're being sued for an unpaid account can bring an unwelcome shock. The best course of action is to respond to the summons as soon as possible. If you provide an answer that is clear, succinct and level-headed, you may end up winning the case -- without ever having to set foot in the courtroom. On the other hand, if you toss the summons aside, you will automatically lose the case.

Instructions

1

Locate the complaint in your summons package. You should have received paperwork explaining when your court date is, certification that you were served, instructions for answering the complaint, any evidence the creditor is submitting and a list of allegations, which constitutes the complaint. This will be the most important form, as you will use it to write your answer to the summons.

2

Answer the complaint by admitting or denying each allegation. You can either type this up or write it on a piece of paper. All that matters is that you clearly state your stance on each allegation. For example, if Allegation 1 states your name and address, you can write, "Answer to Allegation 1: Admit," if the details provided are correct. If Allegation 3 claims you obtained a credit card from Company X, and the summons has provided no evidence of the debt you hold (an account number or statements), you can write, "Deny. I have been presented with no evidence that the account I had with Company X is the same account as the debt alleged in this complaint."

3

List the affirmative defenses after responding to each individual allegation. These defenses are legal reasons why the complaint should be thrown out. Examples of defenses you can use include statute of frauds, meaning no contract exists as proof; time-barred debt, meaning the statute of limitations has expired for the debt; and failure to state the basis of the lawsuit, meaning the summons did not mention an actual state law that was violated.

4

File your answer within the deadline listed on the summons. Most courts will give you 20 to 30 days to do this, which makes it extremely important for you to follow up as soon as possible. Send a copy of your answer to the court and the lawyer listed in the complaint. Choose registered mail to ensure your answer arrives in time.

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