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How the Process Typically Works

First, it's important to understand that lenders don't typically sue immediately. The process usually follows these steps:

1. Default: Your account becomes delinquent after a missed payment, and eventually goes into default after a period defined in your contract (usually 30-180 days).

2. Collections: The lender will first attempt to collect the debt internally through phone calls and letters.

3. Third-Party Collections: If internal collection fails, they may sell your debt to a third-party collection agency. This agency will then aggressively pursue you for payment. This can severely damage your credit score.

4. Lawsuit: If collections are unsuccessful, the original lender or the debt buyer may choose to file a lawsuit against you to get a court judgment.

Key Factors That Influence a Lawsuit

• Amount Owed: Lawsuits cost money in court fees and legal time. It is more economically feasible for a lender to sue for larger debts (e.g., over $1,000). For very small amounts, they are more likely to rely on collections and credit reporting.

• Debt Buyer: Often, the original lender sells the debt for pennies on the dollar to a collection agency. These agencies are sometimes more likely to file lawsuits because any amount they collect is pure profit.

• Your Assets: If a lender believes you have assets (a job, bank account, or property) that they can garnish or lien after winning a judgment, they are more motivated to sue. If you are "judgment-proof" (have no income or assets), they are less likely to sue because even if they win, they can't collect.

What Happens If They Win the Lawsuit?

If a lender sues you and wins, the court will issue a judgment against you. This judgment gives them powerful legal tools to collect the debt, including:

• Wage Garnishment: They can get a court order requiring your employer to withhold a portion of your paycheck (up to 25% of disposable earnings in Florida) and send it directly to them.

• Bank Levy: They can freeze and withdraw funds from your bank account.

• Property Lien: They can place a lien on any real property you own (like a house), meaning you cannot sell or refinance it without paying off the debt first.

Florida-Specific Laws and Your Rights

1. Statute of Limitations: This is crucial. In Florida, the statute of limitations for filing a lawsuit to collect on a written contract (which includes most loans) is five (5) years (Florida Statutes § 95.11(2)(b)). This means the lender has five years from the date of your first missed payment to sue you. After that time passes, the debt becomes "time-barred," and they can no longer legally win a lawsuit against you for it. However, they may still try to collect.

2. Licensing: Ensure the lender was licensed to operate in Florida. Unlicensed lenders may have a harder time using Florida's court system to enforce a loan that violates state lending laws (like exceeding Florida's usury limits on interest rates).

3. Validation of Debt: If a collection agency contacts you, you have the right to request validation of the debt in writing. They must prove that you owe the debt and that they have the legal right to collect it.

What You Should Do If You Can't Pay

• Do Not Ignore It: Ignoring a lawsuit will result in a default judgment against you, meaning you automatically lose.

• Communicate: Contact the lender before you default. Some may be willing to work out a hardship plan or extended payment arrangement.

• Seek Help: Non-profit credit counseling agencies (like those affiliated with the National Foundation for Credit Counseling (NFCC)) can provide advice and help you negotiate.

• Know Your Rights: If you are sued, do not ignore the court summons. You may want to consult with a legal aid organization or a consumer rights attorney. You can find low-cost or free legal help through Jacksonville Area Legal Aid.