When a creditor wins a judgment against you, they may have the right to seize some of your assets to cover that debt. While there are some protected assets, creditors can often attach to other significant assets, making it difficult for the debtor to handle their other financial responsibilities or depriving them of their property. In Florida, there are several essential assets to keep in mind when thinking about which assets a creditor can attach to. Working with an estate planning lawyer can help you protect your assets or determine the best way to handle an interaction with a creditor.
There are many assets that a creditor can attach to, claim, or garnish in order to cover debts in Florida. A creditor can typically claim only assets that equal the value of the debt. However, in the case of large debts, creditors may go after a number of the debtor’s assets. Those include:
A creditor may also choose to garnish the debtor’s wages. In Florida, wage garnishment can reach up to 25% of the debtor’s disposable income. Wage garnishment can begin between 10 days after a small claims judgment or 30 days after a judgment in other courts.
While a creditor can claim many of a debtor’s assets as part of a Florida debt settlement, there are several protected assets that the creditor cannot claim.
Creditors cannot seize the cash value of a life insurance policy, nor can they force the policyholder to withdraw funds from or close out that policy. Whole life and universal life policies can be used to help protect some of those assets.
Many types of annuities are protected from creditors. However, in Florida, private annuities are not always creditor protected. As a result, debtors should be extra careful when setting up those annuities.
Retirement accounts, including Roth and traditional IRA accounts, are protected from creditors in Florida. However, withdrawals or distributions from retirement accounts are not protected. Furthermore, while some inherited retirement accounts (including those inherited by a spouse) are protected, others may not be protected, including non-spouse beneficiaries who are not residents of Florida.
Under state law, health savings accounts (HSAs) are protected from creditors.
College funds put together in qualified tuition programs are typically protected from creditors. Savings accounts set aside for no specific purpose, even if they are earmarked for a child’s college, may not have the same level of protection.
If you have questions about which funds or assets a creditor could take as you try to resolve a dispute, working with a lawyer can prove essential. You need to prepare ahead of time, so do not wait to seek the legal support you need. Reach out to Veliz & Associates, P.A., to discuss your rights and how you can protect your assets while dealing with debt. The best time to plan is before you are worried about a lawsuit filed against you!
We evaluate your case and determine how we might be able to help.
We will meet with you to discuss your next options and lay out a plan.
Our team guides you throughout the process so you feel confident about your choices.