How to Protect My Assets in Florida from Credit Card Debt

Credit card borrowers in Florida are subject to stringent state laws regarding default. If you default on a debt in Florida, you may face several consequences, up to and including repossession of assets. This normally occurs without the courts if you default on secured debts such as mortgages and car loans, but it also can occur through a court order. Be proactive to protect your assets.

Instructions

1

Take a serious look at all of your obligations. If you are currently in default in all of your loans, you'll need to take immediate action. Contact a lawyer to discuss bankruptcy options or call a credit counseling firm to begin negotiations with your creditors.

2

Consider refinancing any secured debt into unsecured debt. The Florida Homestead Act protects those who principally reside in Florida from having their homes seized due to unsecured debt. If you default on a secured debt, however, (such as a home equity line of credit), your home could be taken from you.

3

Set up an LLC, or limited liability company. LLCs are institutions separate from your personal holdings. You can set one up online and receive a federal tax ID, or a de facto Social Security number, specific to the LLC. If you can establish credit under the LLC (using the federal tax ID number), you can refinance personal debts under your LLC. The Florida court system cannot seize personal assets due to LLC debts.

4

Pull a current copy of your credit report. The federal government allows all consumers, including those in Florida, to get a free copy of their reports. Go to www.AnnualCreditReport.com. Look for any court judgments and consider these a priority. Contact these creditors to arrange repayment or settlement. Settlement will further damage your credit, but it can help save your assets.

5

Move any liquid capital to a 529 plan, if you have children. This is a tax-free college savings plan offered by the IRS. Courts and creditors cannot go after these funds in a bankruptcy proceeding. However, you must do this at least six months before you file for bankruptcy in Florida or it is considered an illegal transfer.

6

Contact your remaining creditors and try to arrange settlements. This will stop collection activities, including attempts to seize your assets. Lenders in Florida have the power to reject any settlement offer, though.

7

Work with a credit counselor to restructure debts. You'll still owe the full amount due on accounts, but you'll stop collection activities and perhaps obtain a more favorable repayment plan. Make sure to find a Florida credit counselor through the National Foundation for Credit Counseling.

8

File for Chapter 13 bankruptcy, using a lawyer, if you can. It is not necessary, but an attorney will help you with the complicated language of court documents. Florida law stipulates that in a Chapter 13 bankruptcy creditors and the courts cannot go after assets included in a repayment plan. The court instead will restructure your obligations, usually at much lower interest rates, and mandate you to a payment plan.