Florida undermines personal bankruptcy protections

Filing for bankruptcy gives people the opportunity to dispel large amounts of personal debt. The process also ensures that filers are not pursued for those debt liabilities once the bankruptcy is complete. Therefore, creditors that continue to go after borrowers for debts already discharged in bankruptcy can be accused of breaking Florida bankruptcy law policies.

In response to the national recession and subsequent high unemployment rate in the state, Florida barrowed over $3 billion in federal funds to cover unemployment claims. As a result, major changes were made to the state’s unemployment program to account for the state’s debt. Governor Rick Scott, along with legislatures, increased eligibility requirements and eliminated some unemployment benefits. Beyond that, aggressive efforts were taken to recoup overpayments, which included enforcing wage garnishments and using collection agencies.

One woman filed for bankruptcy and was preparing for foreclosure when debt collectors acting on behalf of the state pursued her for close to $2000. The debts that the woman was accused of owing were apparently settled in 2012, but the state claimed that she was wrongfully collecting unemployment checks. Ultimately, the woman’s bankruptcy was finalized earlier this year and it wasn’t until she filed a lawsuit against the creditors that the harassment ended.

Bankruptcy laws protected the woman against improper collection practices. The state is accused of placing thousands of other people in a similar position, raising concerns among state representatives and watchdog groups. Violating people’s bankruptcy rights can be a serious offense. People that fear they have been subjected to inappropriate collection tactics are encouraged to speak with a bankruptcy lawyer to learn how they are protected under the law.

Source: Bloomberg Businessweek, “Florida’s Scott Dogged by Recovery of Unemployment Checks,” Toluse Olorunnipa, July 1, 2014