Small claims courts in Broward and Palm Beach counties are reporting a spike in the number of cases against debtors, who typically owe between $2,000 to $4,000. Some judges say they are handling more than 25 such cases a week, compared to just a handful a few years ago.
While the downturn has increased the number of debtors, companies are also getting more aggressive about collecting. They say they fear the statute of limitations to collect may be shortened.
I know that in Volusia County, each month, I send out an average of over 300 offers to help to people who are being sued on debt. And that is only one county.
When creditors and debt buyers are not able to work out payment plans, cannot contact the person who owes money, or have seen no payments in quite some time, they are usually left with only one option, and that is to sue to get a judgment.
But please do not turn to debt settlement if you are unable to pay your credit cards. All to often, people are left worse-off after turning to these companies.
In some cases, these companies are not doing well themselves. See another Sun Sentinel article about GHS Solutions having to lay workers off.
If these programs are so successful, people would be flocking to get their help. Instead, the company might be struggling itself.
Meanwhile, there is legislation pending in the Florida House of Representatives (HB 1433) that might make it even harder for these companies to be profitable. Since so many of these companies are fly by night and outright scams, the legislation is attempting to put more rules in place.
The legislation would require many more disclosures to be provided to a debtor before entering into a contract and clear rules regarding when and how much the company can be paid for its services.