Florida has no specific law addressing credit-card default except when it comes to the recourse available to creditors when attempting to collect debts. In Florida, as in every other state, your credit-card company can sue you for the amount you owe. Florida statute of limitations gives the credit-card company four years to collect.
Credit-Card Default
Your credit-card company considers your account in default after about 180 consecutive days of nonpayment. After failing to collect on the loan, the credit-card company charges off the account. However, this doesn't mean you're off the hook. At some point during the collections process, the credit-card company will sell your loan to a third party that continues to make attempts to collect the debt. If that doesn't work, the credit-card company or debt collector can sue you for what you owe plus legal and court fees.
Wage Garnishment in Florida
If your credit-card company wins its lawsuit, the court issues a default judgment that gives it the right to garnish your wages. Wage garnishment laws vary by state. In Florida, a creditor can garnish the lesser of 25 percent of your disposable personal income or 30 times the minimum hourly wage of $7.25. In every state, Social Security, state employee pensions, worker's comp and public assistance benefits are exempt from wage garnishment. Florida is no exception. However, regarding pensions, Florida goes a step further and protects all retirement benefits from wage garnishment. Also unique to Florida, head of household earnings less than $500 are also exempt from wage garnishment. Any amount above $500 is subject to garnishment only if the head of household agrees to it in writing.
Florida Statue of Limitations
In Florida, open accounts such as credit cards and verbal contracts have a statute of limitations of four years. This means that your credit-card company has four years to collect what you owe. Once the statute of limitation runs out, your credit-card debt becomes time-barred, preventing the credit-card company from suing you in court -- although it can still make attempts to collect.
Options
If you can, avoid default at all costs. One way to do this is making a payment arrangement. Because it is unsecured debt, your credit-card company is more than willing to work out a repayment plan with you to get your account current. You can also settle for an amount less than the principal balance. A settled credit-card account shows up as settled, which is much better than a full charge-off. A final option, but drastic measure, is to file for bankruptcy.
Credit Impact
Payment history is a large component of your credit score. Therefore, a credit-card default causes serious damage to your credit score. Because each circumstance is different, it is hard to quantify the impact. Defaults, delinquencies and judgments stay on your credit report for seven years and bankruptcy can stay up to 10 years.
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