Florida is the home of many of the nation’s largest consumer credit counseling and debt consolidation companies. Although the industry is so prevalent in Florida, very few of its residents truly understand the differences between the types of credit card debt management services being offered, or how to differentiate between a reputable organization and one that is not. The aim of this article is to briefly explain what is debt consolidation and what laws regulate these companies, so Florida consumers can ultimately choose the best debt help option for their situation.

There are two forms of debt consolidation for consumers. The first and oldest type is debt counseling. With the help of a credit counselor, you can analyze your budget, get tips on how to better manage your debt, and other assistance. If your situation permits, the credit counseling organization may suggest you enroll in a debt management plan. These programs are typically offered by non-profit debt organizations, who work on your behalf with your creditors to reorganize your debts into more favorable payment terms. This usually involves an interest rate reduction on your credit cards and the convenience of one low monthly payment. It should be noted that debt management programs are not for everyone and much of the services they offer can be done on one’s own. Even though they are normally offered by non-profits, they do charge a fee for these services.

The second form of debt management is known as debt settlement, or debt negotiation. Unlike credit counseling, this type of service aims at negotiating your balances down, not just your interest. For this reason, it is one of the fastest ways to get out of debt. Debt settlement may be a good option to consider if you are considering bankruptcy and are experiencing a financial hardship. As with credit counseling, it is not for everyone. In a debt negotiation plan, the consumer stops paying their creditors and instead saves money each month into a separate bank account. Once enough money has built up, the company contacts and negotiates a lump sum settlement of the accounts, in many cases for dramatically less than the balance. That being said, during the course of the plan, the creditors consider your debts past due, which will most likely have a negative effect on your credit and may result in escalated collections efforts.

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Debt Management Laws in Florida
Florida’s Attorney General has historically been aggressive in pursuing debt companies and lawyers who are suspected of operating fraudulently in this space, but it is important you do your homework to determine whether a service is in fact legitimate. One way is to look at the company’s PayingPaul.Com review. Another is to understand your state’s laws to see if the company you are speaking with is compliant.

Definitions

Florida’s statute defines “debt management” as a service who is paid by a debtor to affect “the adjustment, compromise, or discharge of any unsecured account, note, or other indebtedness of the debtor” or “receive from the debtor and disburse to a creditor any money or other thing of value.”

Fees

Companies and organizations that fit under these definitions cannot charge fees over more than the following:

-$50 as an initial set up charge or consultation.
- $120 per year for additional consultations,
-7.5% of the monthly payment or $35 per month, whichever is greater.

Exemptions

It should be noted that attorneys licensed in Florida and some mortgage entities are exempt from the fee limits mentioned above.

For more information about the laws regulating debt programs in Florida, follow this link: Florida debt statutes.

Having Problems

Are you having problems with a debt consolidation agency, but aren’t having much luck getting it resolved yourself? File a complaint

Other Resources

Filing Bankruptcy in Florida

Bankruptcy Laws in Florida

Debt Collection in Florida