Last Update: 8/9/20
Unfortunately, foreclosures are still a common occurrence in Florida. What’s worse is that the financial devastation does not end with losing a home. That’s because banks have the right to purse a “deficiency judgment” against the homeowner when the foreclosure sales proceeds are not sufficient to pay the bank all of the money it is owed under the mortgage.
Collecting on a Foreclosure Deficiency Judgment
When foreclosure sale proceeds are not enough to cover the remaining balance of the borrower’s debt to the bank, then the foreclosing bank or servicing company will likely seek a deficiency judgment against the homeowner. That’s especially true today with unemployment at a historically low rate.
Many years ago, the Florida legislature granted banks and other creditors the power to recover money owed to them by allowing the creditor to garnish the homeowner’s wages and seizing their assets.
Who is Dyck O’Neal?
Dyck O’Neal is a national company that makes its money as a debt collector. Specifically, Dyck O’Neal’s business is to buy bank debt, which includes buying the right to seek a deficiency judgment against homeowners who did not fully repay their mortgage loans.
Over the past few years, Dyck O’Neal has purchased huge amounts of debt from banks all over Florida. Banks are happy to negotiate these deals because their main business purpose is to loan money, not debt collection. (Dyck O’Neal is so good at their job that the federal government does a lot of business with them. For example. Dyck O’Neal is one of two authorized debt collectors for Fannie Mae.)
Even though banks and other mortgage holders receive less than the full value of the debt they own, they are happy to sell the debt to Dyck O’Neal. Debt collection is not an easy business. Most of the debt cannot be collected for various reasons, including the debtor having filed bankruptcy.
One of the most common questions we receive about Dyck O’Neal is how are they able to purse a homeowner when they had nothing to do with the loan transaction. Simply stated, mortgage debt is freely transferable. Meaning, it can be sold just like any other financial instrument. Essentially what happens is that Dyck O’Neal buys the mortgage debt, which places them in the shoes of the mortgage debt holder, including having the right to pursue a deficiency judgment and garnishment.
Basics of Garnishment
Debt collectors usually first try to resolve debt repayment through negotiation with borrowers by offering payment plans and other similar repayment agreements. However, if the debt collector can’t work out a deal with a borrower, state and federal law allows debt collectors to take additional actions to retrieve the money they are owed.
One of the harshest debt collection tools for the debt collector is garnishment. Garnishment allows a debt collector to recover the money it is owed directly from wages or salary owed to the borrower by his or her employer or other third party (like an insurance company settlement check or money held in an investment company).
Under the terms of most garnishment orders, the debtor’s employer is legally required to pay a portion of each paycheck to the debt collector instead of the employee.
1. What Does Florida Law Say About Garnishment?
Florida Statute 77.01 provides for a writ of garnishment as a right of every judgment creditor. Moreover, Florida Statute 77.0305 allows the debt collector to get a “continuing writ of garnishment against salary or wages” of the borrower.
In Florida, this law provides that salary or wages can be taken to satisfy a judgment. It’s done by the Florida court order called a “continuing writ of garnishment” that is served upon the employer of the person who lost their home in foreclosure and owes the deficiency balance.
This is a legal order signed by a judge. These orders usually direct a debtor’s employer to make periodic payments of a portion of the salary (or wages) of the borrower to Dyck O’Neal.
This must continue until (1) until the judgment is satisfied or (2) until otherwise provided by court order.
2. Are there Federal Garnishment Laws?
In some situations, federal law does apply to garnishing wages and salary. For instance, the Consumer Credit Protection Act limits Florida writs of garnishment.
Under the CCPA, Florida garnishments cannot exceed the lower amount of either: (1) 25% of your disposable income, or (2) the amount that your income exceeds 30 times the federal minimum wage. In 2020, the minimum wage was $8.56 per hour (see this chart for updates).
Defenses to Garnishment:
The good news is that garnishment is not automatic and there are quite a few defenses to this type of debt collection effort. Some of which include:
1. Improper Notice of the Transfer of Debt to Dyck O’Neal
When the bank transfers the debt, including the deficiency judgment, to Dyck O’Neal (called an “assignment”), there are statutory requirements that must be followed to notify the borrower that this has occurred. Under Florida Statute 559.715, Dyck O’Neal (“the assignee”) must give the borrower written notice of the assignment “as soon as practical” after the assignment is made, but “at least 30 days before any action to collect the debt. “
If the notice of the assignment is given past this deadline, then this is a defense against the garnishment. Moreover, if the notice of the assignment is sent before the actual date on the assignment, then this too is a defense to the garnishment action.
2. Statutory Notice Requirements for Garnishment Are Not Followed
Under certain circumstances, a debtor may be able to argue that Dyck O’Neal did not follow proper procedure when it sought garnishment against the debtor.
For instances, under Florida Statute 77.055, the notice to the borrower must say that he or she must move to dissolve the writ of garnishment within 20 days after the date indicated on the certificate of service in the notice if any allegation in Dyck O’Neal’s motion for writ of garnishment is untrue.
If a debt collector does not strictly follow the letter of the law about notice, then the homeowner may be able to succeed in having the writ of garnishment “dissolved.”
3. Garnishment Action Does Not Apply
According to Florida law, Dyck O’Neal cannot garnish any and all income that comes into the debtor’s possession or control. There are several revenue sources that are excluded from debt collection efforts, including writs of garnishment. These are known as “exemptions” to garnishment. A complete list of exemptions are provided below.
4. Statute of Limitations
In Florida, debt collectors have time limits to collect a debt (usually several years). However, certain types of mortgage debt is subject to a specific law that makes the time limit to seek a deficiency judgment very short.
Exemptions to Garnishment
Some borrowers and certain types of assets are exempt from a writ of garnishment by Dyck O’Neal. Some examples of those exemptions allowed under the law include:
1. Head of Household
For instance, if a debtor provides more than half (51%+) of his or her child’s financial support, then those wages or salary cannot be garnished. These borrowers are considered to be “head of household.” However, if he or she makes over $500/week and agrees in writing, then their wages or salary can be garnished.
2. Exempt Source
Some kinds of income are exempt by law from garnishment. These include:
- Social Security benefits
- Supplemental Security Income benefits
- Public assistance (welfare)
- Workers Compensation
- Unemployment Compensation
- Veterans benefits
- Retirement or profit-sharing benefits or pension money
- Life insurance benefits or cash surrender value of a life insurance policy or proceeds of
- annuity contract
- Disability income benefits
- Prepaid College Trust Fund
- Medical Savings Account.
Debt collectors often improperly seize assets that they are legally not entitled to garnish. This happens because most debtors do nothing to challenge the garnishment.
It is up to the borrower to assert his or her legal rights to prevent these wrongful garnishment efforts, including:
1. Answer the Writ of Garnishment
The borrower’s first line of defense is to fight the issuance of writ of garnishment. The debtor will be served by the court with notice that Dyck O’Neal is seeking a writ of garnishment for the payment of the deficiency judgment.
Once served, there is a time frame within which the borrower should file his or her written answer to the action, which should include any defenses and/or exemption arguments. If the defenses or exemptions are valid, the court will likely decline to issue the writ of garnishment.
2. Dissolve the Writ and Seek Damages
If the court grants a Writ of Garnishment and Dyck O’Neal uses the writ to seize funds that are exempt or that are otherwise not appropriate, then the borrower must immediately ask the court for help. For example, the borrower may be able to pursue a wrongful garnishment claim against Dyck O’Neal which can result in the writ being dissolved and the debtor being awarding damages, including attorney’s fees.
What Should You Do?
Anyone who has dealt with the stress of a home foreclosure understands how difficult and protracted these matters can be. An experienced Florida Real Estate Attorney can be of great help in dealing with aggressive debt collectors like Dyck O’Neal – especially when you are facing their attempts to take away a part of your paycheck.
If you are facing a garnishment in Florida by Dyck O’Neal related to a foreclosure deficiency judgment, a good piece of advice is to talk with an experienced Florida real estate lawyer to learn about the legal defenses that are available to you. Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.
For more on Dyck O’Neal, see:
- Dyck-O’Neal Increases Florida Deficiency Judgment Collection Efforts: 19 Articles About Florida Deficiency Judgments
- Deficiency Judgments and Your Credit: Did the Debt Owner Furnish Accurate Information to The Credit Reporting Agencies?
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