How to Settle Your Debts in Florida

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In a Nutshell

This guide provides detailed information about the debt settlement process. After reviewing this information, you can determine whether it is an option worthy of your consideration; if not, you can explore debt management alternatives at the end of this guide.

Written by Upsolve Team.  
Updated March 18, 2020


While difficulty repaying debt can cause financial problems, remember, these problems are not insurmountable. Ask Burt Reynolds. The Florida star of “Smokey and the Bandit” invested in a restaurant chain (ironically called Po’ Folks) that contributed to his bankruptcy filing in 1996. He recovered and successfully resumed his acting career until his death in 2018. New Florida resident Donald Trump has filed for bankruptcy four times. These Floridians faced significant debt-related financial challenges and ultimately overcame them. If you’re struggling with debt, you’re not alone. There are solutions available that can help you successfully manage your debt and regain control of your finances. 

One such solution is the debt settlement process. A Florida debt settlement involves either negotiating directly with your creditors or working with a debt settlement company that can negotiate with creditors on your behalf. Debt settlement allows you to close a debt-related account for less than the total amount owed. You can either make a one-time lump sum payment or two or three installment payments in exchange for partial debt forgiveness. Because lump-sum payments minimize the risk of default, they are the first choice of creditors. 

If you’ve missed making a minimum payment on an account for two or three consecutive months, it may be time to consider debt settlement, especially if you have funds available or property that you can sell to fund settlement offers. Note that debt settlement has tax consequences, since the full amount of money saved is taxable income if it exceeds $600. Also, it will temporarily affect your credit score, so if this matters to you, then you may want to consider some debt management alternatives. Unsecured debt (including credit card debt) works best for debt settlement, as creditors of secured debt generally choose to exercise their repossession rights in the event of payment default. 

Debt settlement companies often require clients to make regular installment payments into a bank or escrow account. When these payments sufficiently accumulate, a lump sum payment is made to a creditor until the debt, as settled, is paid in full. While there are more than a few unscrupulous debt settlement companies out there, not all debt settlement programs are scams. However, it generally makes good sense to research and investigate the companies that are best qualified to offer what you need.

Learn More Through Free Nonprofit Credit Counseling 

Florida residents struggling with debt should know that they can meet with a certified credit counselor experienced in personal finance at no cost, at any time. If you choose to schedule a free credit counseling session to explore your money management options, make sure to work with a credit counseling agency (CCA) that is a member of the National Foundation for Credit Counseling (NFCC). All NFCC member agencies offer each individual a free credit counseling session at no cost. During your free credit counseling session, a credit counselor will meet with you one-on-one and assess your finances and establish short-term and long-term goals. At the end of the session, the counselor will then develop an action plan to help you achieve these goals. One possible recommendation is a debt management plan (DMP), which is a form of debt consolidation. Another possible recommendation may be debt settlement. It’s important to create an action plan that is personalized to your financial situation and circumstances.

How to Settle Your Debts in Florida

This guide provides detailed information about the debt settlement process. After reviewing this information, you can determine whether it is an option worthy of your consideration; if not, you can explore debt management alternatives at the end of this guide.


Collect the Details About Your Debts

The more you know about all available debt-relief options, whether debt management, debt consolidation, or debt settlement, the more information you have on which to base your final decision. Begin this process by gathering details about your debts. A vital tool is your credit report which, along with your current credit score, is available from any of the three credit bureaus. Florida residents are entitled to one free credit report every 12 months. 

Review your credit report for all your different types of debt, whether unsecured debt, like credit cards, secured debt, like auto loans, or other types of debt, like taxes and federal student loans. The most recent account statement for any debt should show the outstanding balance, interest rate, monthly payment amount, and the date of your last payment. Constructing a complete picture of your financial situation will help determine which debts may be a good fit for debt settlement.

Gather the paperwork that contains the relevant details about all your debts, not just your unsecured debts, but also concerning debts that you don’t plan on settling like mortgages or income taxes. Calculate each debt category’s monthly minimum payment totals. 

Once you’ve reviewed your credit report, you’ll have some information that can help you decide which debt is best for settlement. This information can also put you in a better position to consider other debt-relief options like debt consolidation and debt management. You’ll know which monthly payments you may be able to continue to afford and which you need to reduce or reorganize through a debt management option.

Collect Details About Your Ability to Settle Your Debts

Any money you receive regularly must be considered when determining income for purposes of a budget. If you can’t afford a lump-sum payment or monthly installment payments, your debt settlement will fail. If you earn wages regularly, estimating income for a budget shouldn’t be difficult. If you receive income from non-employment sources like alimony, it will require a more detailed examination of sources and receipts to estimate how much money you can expect to have available to you on a regular basis.

Next, consider your monthly fixed and variable expenses. Fixed expenses remain the same from month-to-month. Cable, internet, car insurance are examples of fixed expenses. Variable expenses like groceries and gas fluctuate monthly for various reasons. Estimate your expenses by reviewing your bank statements for the last three months and then divide the total by three. 

Any minimum monthly debt payments that you plan on continuing to pay should be included in this calculation of expenses for budgetary purposes. But don’t include any minimum monthly debt payments for debts that will be paid into any fund under a debt settlement, debt consolidation, or debt management plan. At some point, you may have to revise this to account for any debts, like student loan payments, that you don’t settle, consolidate, or pay pursuant to a debt management plan.

The total amount remaining after you subtract expenses from income is your disposable income, which represents the money available to pay into any settlement fund. If this total is insufficient, you’ll have to consider other debt-relief options, like debt management or debt consolidation. If you don’t have enough monthly disposable income to cover your expenses, a Chapter 7 bankruptcy might be your best option.

Learn About the Costs to Settle Your Debts in Florida

One purpose of a debt settlement is to eliminate or reduce late fees and penalties related to default. There’s a cost involved in how you settle your debts. Whether you use a debt settlement company or take responsibility for debt negotiations yourself, both carry consequences that cause you to pay money out-of-pocket.

In addition to late fees and penalties, there are the costs that you will incur if you hire a debt settlement company. These include the fees paid for the company’s services and any bank fees. However, keep in mind that the funds in the account, as well as any interest that accrues, are your property and that you are legally allowed to access them at any time.

A debt settlement company’s fee may be calculated based on a percentage of your total debt or a percentage of your debt savings. A fee based on the amount of debt that you save gives the debt settlement company an increased incentive to get the job done.

Decide Whether to Work With a Florida Debt Settlement Company

If you are organized, skilled on a computer, and love to talk and argue, you can choose to settle your debts directly with your creditors and avoid the fees charged by a debt settlement company. Not only will you save the costs of hiring a debt settlement company, but you will assume complete control over every step of the debt settlement process.

The drawback of this approach is that you will need to expend a significant amount of time and effort. It will be your ultimate responsibility to keep track of everything that’s happening with your debt settlement. If you handle the debt settlement negotiations personally, you may lack time to deal with every single creditor.

Also, debt settlement companies are much more experienced in settling debts than the average consumer. These companies possess the ‘insider knowledge’ of what a creditor typically accepts, and they can provide necessary guidance throughout the process. However, be wary of those that charge fees upfront.

Research Florida Debt Settlement Companies

In Florida, a debt management service or credit counseling service may not charge a fee greater than $50 for their initial setup or consultation. Subsequently, they may not charge or accept a fee or greater than $120 per year for additional consultations. Any person engaged in credit counseling or debt management services is prohibited from charging fees in Florida in excess of the greater of 7.5 percent of the amount paid monthly by the debtor or $35 per month. A consumer charged excessive fees may bring an action for damages, costs, and attorney’s fees.

Any person engaged in debt management or credit counseling services must distribute to the appropriate creditors all funds received from a debtor, less any permitted fees and creditor contributions, within 30 days after receipt. Further, any person engaged in debt management services must maintain a separate trust account for the receipt of any funds from clients and the disbursement of any funds on their behalf.

Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA) was passed in 1973 to protect consumers. Check the Florida Attorney General’s website for more information about consumer protection. The Better Business Bureau and other consumer protection organizations can help you learn more. The Federal Trade Commission (FTC) website also contains valuable resources for consumers.

How to Make Your Debt Settlement Work

A month should never go by where your debt settlement payment schedule isn’t current. Failure to honor your “end of the bargain” can result in termination of your debt settlement agreement. The due date of any monthly payment related to a debt settlement is a day especially worth noting on your calendar. Separating this date from a mortgage or rent payment to balance making large debt payments over the course of the month and avoiding large outlays of cash at one time is a wise course of action. Any extra, unexpected money that you earn or obtain may be used for making extra payments into your settlement bank account.

Alternatives to Debt Settlement

There are other money management and debt relief alternatives available if a debt settlement plan isn’t the right solution for your situation. You may need to consider other alternatives because of your amount of debt and the types of debt you owe. But don’t give up! There are other effective options available to help you succeed. Credit counseling agencies can help you learn about other debt-relief options, such as debt consolidation and bankruptcy. Meeting with a CCA is beneficial because they’ll make your decisions better informed going forward. 

Florida Debt Consolidation

A Florida debt consolidation loan can make managing payments a lot easier. This kind of loan may be available in many different forms, even as a credit card balance transfer or home equity loan. You may even consider a personal loan from a family member or friend. A consolidation loan aims for full payment at better payment terms than you’re paying currently. This obligation combines all your debts into a single monthly account, which is paid monthly. You’ll need a favorable credit score to take advantage of this option at better rates than you’re paying on your debt now. 

Florida Debt Management Plan

A Florida debt management plan is a form of debt consolidation. Unlike a traditional approach to debt consolidation, a debt management plan does not involve securing a new line of credit. You don’t need a high credit score to qualify for a debt management plan. A debt management plan offers a workable payment schedule. After a credit counseling agency negotiates with your creditors, you’ll make one monthly payment to the agency, which will then distribute the funds of that payment to the creditors involved in your plan. 

Florida Bankruptcy

After considering debt settlement, debt consolidation, and debt management, consider a free consultation with a Florida bankruptcy attorney. Credit card debt, medical bills, and even some taxes are dischargeable in bankruptcy, which will also stop collection calls and other collection agency contact.

Upsolve can also help you file for bankruptcy. We help thousands of Americans file bankruptcy cases every year, whether they hope to file with or without the help of a bankruptcy attorney. Upsolve can help you file a Chapter 7 bankruptcy case if a debt management plan or a debt consolidation loan aren’t good options for your situation. 



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Upsolve is a 501(c)(3) nonprofit that started in 2016. Our mission is to help low-income families who cannot afford lawyers file bankruptcy for free, using an online web app. Spun out of Harvard Law School, our team includes lawyers, engineers, and judges. We have world-class funders that include the U.S. government, former Google CEO Eric Schmidt, and leading foundations. It's one of the greatest civil rights injustices of our time that low-income families can’t access their basic rights when they can’t afford to pay for help. Combining direct services and advocacy, we’re fighting this injustice.

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