Budget planning services, in general, are not allowed in Florida, and have been prohibited since 1959. There are some exceptions to Florida's ban on budget planning services, but they are highly regulated. Any activity that does not fit squarely within an exception is strictly prohibited.
(To learn more about consumer protection laws in Florida, visit our Florida Debt Management Center.)
What Are Budget Planning Services?
Under the law in Florida, a business engages in budget planning if it enters into a contract whereby:
- a consumer makes periodic deposits of money into an account
- the business distributes this money to the consumer's creditors in accordance with an agreed plan, and
- the consumer pays a fee for this service.
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Exceptions: Services Specifically Allowed
There are three categories of exceptions. These services are allowed to operate in Florida.
Services Provided by Attorneys
Legal services provided by attorneys are not subject to the ban. Attorneys may assist you with workout plans with your creditors where a set amount is agreed upon with your creditors, and the funds are collected and distributed by the law firm. Attorneys are regulated by the Florida Bar which requires them to provide you with a written agreement clearly setting out the services to be provided and the fees to be paid, and to keep detailed records for client escrow accounts.
Contracts for Accelerating Mortgage Payments
Some lenders offer programs for alternatives to regular monthly mortgage payments which are designed to pay down your mortgage more quickly without imposing a greater financial burden on you. These agreements are legal if they apply to only one mortgage and not to other debts or more than one mortgage. Often these programs require you to make frequent smaller payments. By making these more frequent, smaller payments, you can pay down the principal balance on your mortgage more quickly.
If you are planning to enter into this type of arrangement, you should make sure that you understand:
- whether the service is being offered through your lender
- whether you are required to pay a fee for the service (as opposed to the lender paying any fee directly)
- whether there is any time delay in remitting your payments to the lender, and
- whether you can cancel the arrangement without penalty if your situation changes and you wish to return to making one regular mortgage payment.
Debt Services Specifically Allowed by Rule or Statute
There are some types of services that are specifically allowed if the Florida Financial Services Commission has determined that consumers are adequately protected and that the public interest does not require additional protections.
Often, the specific rules or statutes that allow these services provide safeguards, including the posting of bonds or security by the business, and contain strict rules and regulations for the operation of the business. Activities that are allowed in Florida under this exception, provided they are licensed and comply with strict operating requirements, include
- consumer credit counseling
- debt management services
- debt settlement services, and
- credit service organizations.
To learn more about the different types of debt relief services, visit our Debt Settlement & Negotiating With Creditors topic page.
Only Use a Licensed Debt Service Business
In order for most businesses to operate legally within an exception, they must be licensed by the state. In order to protect yourself, only use debt relief services from a business that is licensed in Florida.
To find out more about whether a particular service is operating lawfully in the State of Florida and maintains the proper license, you can check with the Florida Department of Financial Services. To learn whether the state has taken any enforcement action against the company, you can check with the Office of the Florida Attorney General.