When you have been sued, and a Florida court has entered a judgment against you, you may be concerned about how that judgment will affect your assets. If you are interested in learning more about protecting your assets from creditors with judgments against you, we can help. Contact your Boca Raton asset protection lawyer at Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A., for more information about your options for protecting your assets.
Understanding Judgments
A judgment is a court order stating that you owe another person or company a specific amount of money. If a creditor, or someone you owe money, has sued you in court for money and won their lawsuit, the court will enter a judgment against you for the amount of money that you owe the other party. Although a judgment alone does not force you to pay a debt, it is a powerful tool that a creditor can use to go after your assets to satisfy the debt.
Judgments last for 20 years after a court orders them, and a creditor can renew that judgment for another 20 years if the judgment remains unpaid. A creditor also can renew judgment liens on real estate every ten years if the judgment remains unpaid.
Furthermore, judgments automatically accrue interest until paid in full under Florida Statutes 55.03. The Chief Financial Officer of the state sets the interest rate on judgments on January 1st of each year and then adjusts the interest rate as needed quarterly or on April 1st, July 1st, and October 1st. The interest rate is calculated by averaging the discount rate of the Federal Reserve Bank of New York for the preceding 12 months, then adding 400 basis points to the averaged federal discount rate.
How Creditors Use Judgments to Collect Debts
Once a creditor has a judgment against you, they can use various tools to enforce payment of the judgment. These tools include:
- Garnishment of non-exempt funds held in your bank account(s);
- Garnishment of a portion of your paycheck, subject to the head of family exemption and/or federal withholding laws;
- Placement of a lien on any real estate you own in the county where the judgment is recorded, other than your homestead; and
- Sheriff’s levy to seize and sell your non-exempt personal property, including vehicles, boats, jewelry, and other valuable items.
Protecting Your Assets from Judgment Collections
Even if you have a judgment against you, you still can take steps to protect your assets from the reach of creditors. A major source of asset protection is the exemptions available under Florida law. For instance, the Florida State Constitution protects your homestead, which consists of ½ acre of property within a municipality and up to 160 acres outside a municipality, from being sold to satisfy a judgment against you.
Furthermore, you can protect a bank account from garnishment for a judgment if the judgment is solely against one spouse and the bank account is held by both spouses as tenants by the entireties. In other cases, although a joint account with another person is subject to garnishment, the other account owner can challenge a garnishment of that account by showing that the funds belong to them, not to the judgment debtor.
Frequently Asked Questions (FAQ)
Does the homestead exemption protect real estate other than my homestead or my primary residence?
No. You only claim one homestead, which is your primary residence, subject to the limits described above. However, you can protect other real estate from a creditor if you own it as tenants by the entireties with your spouse, and the judgment is solely against you, not jointly against you and your spouse.
What is the head of family garnishment exemption in Florida?
A person who provides more than half of the support for a child or another household member qualifies as the head of the family. If the head of the family makes $750 or less in net wages, then those wages are exempt from collection. Furthermore, if you deposit the head of the family’s wages into a bank account, they will remain protected from creditors for up to six months.
What are the exemptions for personal property under Florida law?
You can protect up to $4,000 in personal property from levy or garnishment, including funds held in bank accounts. The Florida Constitution also protects another $1,000 in personal property.
You also can claim an exemption for up to $5,000 of the value of your vehicle. If the fair market value of your vehicle, less any outstanding loans on the vehicle, is less than $5,000, you can use this exemption to fully protect that vehicle from being taken by a creditor to pay off a judgment. You also can combine the $4,000 personal property exemption with the $5,000 vehicle exemption to protect up to $9,000 of the value of your vehicle.
We Can Help You Protect Your Most Valuable Assets
A Pembroke Pines asset protection attorney at Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. can assist with the best means for protecting your family and business assets. Contact our office today at (954) 966-2112 or online to schedule a time to discuss your asset protection concerns with our attorneys.