Without a doubt people choose to live in Florida for its climate, beautiful beaches and year-round recreational diversion. But there is another reason why people flock to the state.
Florida is widely referred to as a “debtor-friendly state” – one that offers debtors a great deal of protection from creditors. So, it’s no surprise the state reported the second-highest number of personal bankruptcy filings in the U.S. in 2009.
Florida’s bankruptcy and garnishment laws are much more liberal than most other states. In Florida, the wages of a person who provides more than half the support for a child or other dependent are exempt from garnishment. Wages in a bank account that belong to a head of family retain their protection from being seized for six months, even if the wages are mixed with money from other sources.
In Florida, if you own the home where you live, it is protected from all creditors except those holding a mortgage or lien on the residence. You can exempt or protect your home and up to one-half acre of land from any forced sale if you live in an incorporated area.
The Florida Constitution offers the right to exempt up to $1,000 in personal property from confiscation by a creditor. Interest in a vehicle is exempt up to $1,000 of its value. All professionally prescribed health aids used by you or your dependents are exempt from being taken by creditors. Other types of income, including workers compensation, Social Security, unemployment, disability, retirement and Veteran's benefits are exempt, too.
Lenient bankruptcy and garnishment laws are only a small portion of the challenges faced by the Florida Accounts Receivable Management (ARM) industry. While the industry as a whole is forced to focus on reducing expenses, Florida firms are faced with increasing overhead costs due to issues such as the volume of Fair Debt Collection Practices Act (FDCPA) lawsuits, costly disaster recovery plans and insurance premiums due to the unstable weather, increased training as a result of teaching employees how to adapt and communicate with various cultures and elevated skip-tracing expenses because of a transient population.
What’s more, Florida Officials announced late last year plans for a crackdown on “abusive debt collectors” as a response to criticism over inactivity on 4,400 (later changed to 2,400) state complaints against debt collectors.
For months, Florida’s Attorney General Bill McCollum and Florida’s Chief Financial Officer Alex Sink each pointed fingers at each other for not addressing the complaints. But now, as they position for the Governor’s race, they are fighting over who gets the power to regulate and punish debt collectors,
It seems they have both found a “cause” sure to gain favor among voters given the complaints are only being reported as a number rather than as a minuscule percentage of calls made by collectors.
The Florida Collectors Association (FCA), a unit of ACA International, met with Alex Sink last August for the purpose of introducing the association and educating Sink on the programs the ARM industry has in place to ensure compliance, educate consumers on managing debt and build a positive image for the industry.
Shortly after the Sink/McCollum feud started, Sink’s chief of staff was advised by FCA that statements made in regard to the number of complaints were not supported by facts as the department was not tracking the types of complaints that were received.
FCA requested copies of the complaints and verified that there was no distinction between inquiries as to consumer’s rights, complaints regarding the original creditor turning the account over to a collection agency and actual complaints specifically against collection agencies.
FCA has reached out to Florida’s Department of Financial Services in the past offering the Association’s help in creating a complaint tracking solution and educating staff members on identifying valid complaints.
In spite of FCA’s efforts, Sink wants to reduce the number of complaints needed to refer an abusive collector to the Attorney General’s office, give the state the authority to investigate alleged violations - including access to licensee books and records - implement stronger penalties such as imposing substantially higher fines and make it easier for consumers to file complaints by removing the requirement that the complaint be in writing.
McCollum is seeking more power to file civil lawsuits against collectors in state court as well as federal court. A major concern of the ARM industry is McCollum’s proposed initiative to deem any violation of the Florida Consumer Collection Practices Act an inherent violation of the state’s Deceptive and Unfair Trade Practices Act.
This would give the Attorney General’s office the option of seeking civil penalties of up to $10,000 per violation. As part of a new complaint system, the AG’s office will begin working with other state Attorneys General to forward complaints about collection offices operating outside of the state. McCollum has mentioned his desire to “go to court and shut down debt collectors.”
Florida Gov Charlie Crist, McCollum and Sink met last month to discuss these issues, and many more. Among the issues: whether to eliminate a requirement that the Office of Financial Regulation must investigate complaints by written communication between the consumer and the accused collection agency; revising the consumer collection agency registration process to include fingerprinting for applicants and persons with the ability to direct the management of the business; and increasing the criminal penalty for unlicensed activity from a first degree misdemeanor to a third degree felony.
A bill recently introduced by the Florida Senate Banking and Insurance Committee would expand the authority of the Attorney General’s office to take action against out-of-state consumer collectors. It would include language that a violation of provisions relating to consumer collectors is a violation of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA).
As Attorney General, McCollum is “willing to go above and beyond what the law currently requires so that people who have complained about abusive practices by debt collectors may finally get some relief.”
Identifying an act or practice in Florida’s collection statute as a “per se” violation of the FDUTPA will allow McCollum to pursue a violation of the debt collection act as unfair or deceptive without having to prove separately unfairness or deception. Any violation of Florida’s debt collection statute would automatically constitute a violation of the FDUTPA.
This is only one of numerous bills that have been proposed over the last several weeks targeting Florida’s ARM industry. Perhaps instead of imposing new regulations, and punishing collectors who abide by the rules, the State should enforce the laws currently in place to protect consumers against the minority of collectors who are not following those rules.
All of this actually started over the accusation that Florida had not done anything to follow-up complaints against collection agencies. Why not simply start by putting a process in place to track and investigate the existing complaints in order to understand the actual problem?
How can the state propose solutions when the problem has not even been identified? This is simply politicking at its best.
Perhaps the ease in submitting a complaint is what created this train wreck in the first place. Making it even easier by eliminating the requirement that the complaint be in writing will not help to identify valid complaints but will, in fact, make it more costly and time consuming to analyze and resolve.
The proposed regulations will penalize and add overhead costs to Florida collection agencies that already are challenged by so many other issues. These collectors are simply trying to make an honest living, serve their clients and make a positive contribution to the economy that benefits all consumers.
Although collection agencies in every state may have their own specific issues and challenges, there is one thing they all seem to have in common: Every state government appears to be seeking new ways to generate new sources of revenue to cover their slipping tax revenue and budget shortfalls.
No better target than the collection industry; certainly more unpopular than ever with the general public as a result of the tough economic times. Ironically, it is this same industry that, according to a survey by PricewaterhouseCoopers LLP, supports more than 420,000 American jobs, saves the average household $351 a year and benefits consumers and businesses by recovering billions of dollars in delinquent debt each year that would otherwise go uncollected.
Pam Kirchner is CEO at BCA Financial Services Inc. in Miami and president of the Florida Collectors Association.
