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What you should know before you sign that debt settlement agreement in Florida

Posted by Alex McClure | Apr 13, 2018 | 0 Comments

Lake Mary Bankruptcy and Consumer Attorney - Law Office of Alex McClure

Many debt collectors are ready and willing to enter into settlement agreements with consumers who owe their clients money. This is true whether your debt is in collections, whether it is being actively sued on or whether a judgment has been entered.

Some debt collectors are even willing to enter into agreements when your bank account or wages have been garnished, but this is rare and generally ONLY advisable if you have an attorney working for you on your case.

In the case of a wage or bank garnishment your situation is particularly serious and you should be working with an experienced attorney so that you are exercising all of your rights available under Florida and federal law.

Most large creditors have a dedicated collections department or have outsourced these functions to a third-party collection agency or attorneys office. It is these agencies and attorney's offices which are constantly attempting to reach you by phone, email, lawsuit and any other means possible to initiate contact and collect the outstanding debt.

I have drafted, negotiated, executed, and litigated THOUSANDS of settlement agreements on behalf of creditors and debtors in Florida, and through all of that experience I have some thoughts and concepts for you to consider.

Here are several things which you should be aware of before you sign that debt settlement agreement in Florida:
  • The agreement was drafted by the creditor or their attorneys. It is generally in terms most favorable to the creditor and least favorable to you.
  • There are potential tax implications in certain debt settlement agreement arrangements. The creditor/debt collector will not discuss specifics of these implications with you.
  • You will likely be unconditionally admitting to the legitimacy and amount of the debt that is being collected. This could be extremely problematic for numerous reasons and is likely one of the most dangerous (next to an exemption waiver) provisions that unrepresented or uninformed consumers agree to in settlement agreements.
  • You will likely be waiving any claims you have against the creditor and its collectors and attorneys for illegal collection practices and effectively waiving your right to bring a lawsuit against them for any potential violations which may have occurred in your case.
  • The agreement will likely not include any specific guarantees regarding how the agreement will impact any credit reporting regarding the debt.
  • The agreement may require that you sign a waiver of exemptions which you possess as a matter of right under Florida or federal law. I have seen such waivers literally bankrupt people. The head of household waiver pursuant to Florida Statute 222.11(2)(b) is one which you should NEVER sign unless you have first consulted with an attorney.
  • The agreement may potentially restart the clock on the statute of limitations.
If you are seeing any of the above for the first time or have not even considered these issues, you would almost certainly benefit from the advice and counsel of an experienced attorney prior to entering into any debt settlement agreement in Florida.

While I advise people to speak with an experienced attorney before entering into ANY settlement agreement with a creditor or debt collector (this includes an attorneys office) I understand that many people will not or cannot seek out such advice. The following is a list of things which you should keep an eye out for when you are going it alone on the debt settlement road:

  • Get it in writing. Everything. And have any corrections made to the document BEFORE you sign. Do not sign a partial agreement and then piece together multiple amendments or revisions.
  • Try to not admit to anything. This is good advice in general but especially in a settlement agreement. Have the debt referred to as “disputed” whenever possible.
  • Try to obtain specific representations regarding the tax implications and the credit reporting implications. These will be difficult to get without the help of an attorney, but try.
  • Don't sign a general liability release or a release of prior conduct on the part of the debt collector.
  • Florida Statute 222.11(2)(b) provides a specific form for an individual to waive his/her right to claim a head of household exemption to wage garnishment in Florida. Many debt collectors will attempt to have you sign such a waiver as a part of any settlement they offer you.
  • Florida's head of household exemption is one of the most powerful exemptions available to consumers under Florida law. I would advise that you NEVER, EVER sign such a waiver without first speaking to an attorney experienced in wage and bank garnishment law in Florida.
  • If you don't feel comfortable with the agreement, DON'T SIGN IT.
  • Don't give into to the fire sale urgency of the debt collector. Acting under a sense of urgency will likely cause you to not consider your best interests. Don't give into the hype over the “today only” or “right now only” pressure as you may do something you later regret.

For these reasons and many others, I highly recommend that all persons strongly consider seeking out experienced counsel to negotiate any settlement agreements which they are contemplating. Many people, intending to do right by their obligations enter into settlement agreements only to later realize that they had been taken advantage of or had entered into an agreement the terms of which they didn't fully comprehend at the outset.

As an attorney it is easier for me to help you craft a fair and comprehensive agreement up front than it is to try to put together pieces of a puzzle down the road when serious consequences come to fruition.

Most importantly, if you aren't comfortable with the settlement agreement you are considering or if there are terms and conditions which you don't understand give yourself the opportunity to reach out to see if there is anything I can do to help you first.

The Law Office of Alex McClure provides services in Lake Mary, Sanford, Longwood, Deltona, Deland and all of Seminole, Volusia, Orange, Brevard and Lake Counties.

About the Author

Alex McClure

I spent nearly 10 years litigating for some of the largest creditors and debt buyers in the consumer credit and finance industry. I now put those skills to use representing the interests of my fellow community members facing the most challenging financial problems of their lives. I exclusively practice consumer credit and finance law which includes bankruptcy, consumer protection law, wage and bank garnishment defense and debt defense litigation.


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I make every effort to tailor my services to the individual needs of my clients by approaching their issues with an eye towards both their short and long-term goals. I strive to provide solutions which address their immediate concerns and helps them create a realistic and meaningful path towards long term financial sustainability. I look forward to working with you to develop those solutions and help you successfully navigate your consumer legal issues.