Just what can a creditor or debt collector do to collect a debt in Pennsylvania? Creditors and debt collectors will often lie about what they are allowed to do to collect against you. Knowing just what they and their agents can and cannot do is the first step in protecting yourself from harassment and loss of assets. See below for answers to common questions about debt and judgment collection and how to protect yourself from aggressive creditors.
Debt settlement can be a good option for resolving debts, including judgments. Most creditors will negotiate lump-sum settlements of debts or, in some cases, a payment arrangement. Often, an attorney can help you reach a better settlement than you could reach on your own. However, debt settlement can have some tax consequences. Before entering into negotiations with a creditor over any significant debt, be sure to speak to an attorney. >>More
Many debts, including judgments, are dischargeable in bankruptcy. In some cases ,bankruptcy may be the best solution. For individuals, Chapter 7 and Chapter 13 bankruptcy are the most common options. Chapter 7 bankruptcy allows debtors to discharge all or most of their debt. A typical Chapter 7 case lasts four to five months from the date of filing.
Chapter 13 is a payment arrangement whereby the debtors pay back a portion of their debt over 36 to 60 months. Debtors typically file under Chapter 13 if they are trying to save a house or other property, because Chapter 13 allows you to pay back any mortgage or other secured loan arrearage over time. Chapter 13 is also an option for debtors whose income is too high to qualify for Chapter 7.
It is sometimes possible to reopen a judgment if the creditor failed to serve the debtor properly orthere are other jurisdictional problems with the case. However, the debtor musthave a credible defense to the debt.
It is common for creditors sell and re-sell debts. In the process, paperwork is often lost. Thus, when a creditor other than the original creditor sues a debtor, the new creditor often cannot prove that it owns the debt.Debtors frequently win these cases in court. Many debtors do not contest such cases and lose by default.
The Pennsylvania Statute of Limitations on most debt is four years. The Statute runs from the date of the last payment or the date that the debt became past due. Note that if a creditor sues you after the Statute of Limitations has run out, you must raise the Statute of Limitations defense in answer to the lawsuit. However, the Statute of Limitations is a complete defense. If you think a debt is beyond the Statute of Limitations, you should speak to an attorney. >>More
In Pennsylvania, a married couple typically holds their joint property as "tenants by the entireties." A creditor of one spouse cannot execute against such joint property, including a home, a joint bank account, etc. However, the joint property may no longer be protected if it is sold or transferred, the couple divorces, or there is a property settlement in conjunction with a legal separation.Moreover, tenancy by the entireties does not protect a married couple’ property against their joint creditors. In other words, if it is a joint debt that you and your spouse, it is not protected by tenancy by the entireties.
QuickNote: An authorized user on a credit card or other credit account is not a joint debtor unless the other user is a co-signer or guarantor of the debt. This issue can surface when a couple attempts to use tenancy by the entireties to protect joint property and in bankruptcy cases where only one spouse files. Consider removing your spouse as an authorized user to avoid any confusion, if filing for bankruptcy or using a tenancy by the entireties defense.
The following items are exempt from execution by most creditors under Pennsylvania and Federal law: Most public benefits, Social Security benefits, money in retirement accounts (such as 401ks and pensions), and unemployment benefits. (SocialSecurity benefits are still exempt once they are in the bank.) Also, tenancy by the entireties protects most property that married couples own jointly from individual creditors of one spouse.
Yes, when a creditor obtains a judgment, the judgment becomes a lien on your real property located in the county where the judgment was issued. The creditor can transfer the judgment to any county where the debtor has property. Judgment liens on real property stay in place until they are paid or otherwise released.This situation can cause problems when you try to sell the property.
Although here are rather limited exemptions to the attachment of bank accounts and most other personal property in Pennsylvania, some personal property is exempt under state and federal law. Moreover, joint real estate and joint personal property of married couples have significant protections from the individual creditors of one spouse under the doctrine of tenancy by the entireties.
Tolevy personal property (other than a bank account), the sheriff will come toyour home and make a list of your personal property. At a later date, theproperty will be sold at a sheriff’s sale, unless you resolve the debt first.This process may sound a bit intimidating. However, if this happens, do not worry.The sheriff will not walk off with your personal property. That being said, you may wish to ask the sheriff tocome back at a later date. Then, call an attorney right away.
Yes, a judgment creditor can levy personal property, including vehicles and the contents of a home. Levies of tangible property like this are not as common as bank levies, but it is sometimes used to try to force a settlement. In the case of a vehicle, it is somewhat unusual for a creditor to try to levy a vehicle that is secured by a loan because it would have to pay off the loan before receiving anything.
The most common reason a creditor knows where you bank is that you wrote the creditor a check from that bank. Creditors often ask debtors where they bank when debtors call to inquire about their accounts. However, by the time a lawsuit comes around, the debtor has forgotten that he or she has given this information to the bank. Creditors also use a variety of other techniques, such as sending a debtor a small check, which the debtor cashes, perhaps thinking it is a rebate. The chased check provides the creditor with the name of the debtor's bank. Finally, the creditor may serve the debtor with discovery, which the debtor is obligated to answer.
The short answer is yes. If a creditor obtains a judgment against you, it can obtain a writ of execution to levy your bank account without prior notice to you. The bank account will be frozen, and you will have a period in which to respond. However, unless the money in the account is exempt (see statutory exemptions below), the creditor can take all but a $300 general exemption up to the full amount of the judgment.
***VERY IMPORTANT NOTE: If a creditor has a judgment against you, it is usually advisable to move your bank accounts to a new bank (one that you have not used before), even if you have retained an attorney to negotiate the debt. If you move accounts, be sure to stop all automatic deposits to the old account. Ask your attorney for details.
Although a private debt creditor cannot get an order garnishing wages directly from your employer, once the wages are in your bank account, they are no longer exempt. Only benefits from certain sources, such as social security, veteran’s benefits, etc., are exempt after they are in your account (up to a certain level). If you have social security or other exempt income, you should discuss with your attorney whether you should keep these funds in a separate account.
Generally.There is no wage garnishment in Pennsylvania for most debtsicluding credit cards, private loans, mortgage deficiencies, etc. The only exceptions to thearnishment rule are for domestic support obligations, some government andcrime-elated-related debts (e.g.,taxes, fines, etc.), federal and federally backed student loans (not private student loans), and judgments for unpaid rent. If a debt collector threatens wage garnishment when it is not available, it is a violation of the federalFair Debt Collection Practices Act and Pennsylvania law.
Quick Note: If you work for an employer in another state, the creditor may be able to obtain a judgment in that state and garnish your wages there in some circumstances.
When you default on an unsecured debt, the creditor or debt collector can collect against you, within the limitations of consumer laws, such as the federal Fair Debt Collection Act (“FDCPA”) and the Pennsylvania FairCredit Extension Uniformity Act (“FCEUA”). For the most part, these laws limit collections to calls and letters within reasonable hours.
Debt collectors who violate the FDCPA can end up paying the debtor damages and attorneys fees. They can call and write to you within limitations set by law. For more on the FDCPA, FCEUA, and other consumer protections, see my article.
A creditor or debt collector cannot take your real or personal property with out first suing you and obtaining a judgment. However, once a creditor has a judgment, the creditor has several options for collecting on the judgment.
Regardless of whether a creditor has a judgment or not, there are limits to what it can do to collect a debt. The actions of debt collectors are limited by the federal Fair Debt Collection Practices Act(“FDCPA”), the Pennsylvania Fair Credit Extension Uniformity Act (“FCEUA”), and other consumer laws. Common acts, such as impersonating an attorney or law enforcement officer, threatening arrest, calling in the middle of the night, etc., are forbidden.
Likewise,providing false information about a debtor’s accounts to the credit bureau is aviolation of the Fair Credit Reporting Act (“FCRA”). Violations of any of these acts can result inthe debtor paying you damages and your attorney’s fees.
A judgment creditor has sued you in court and obtained a judgment against you(either because you lost the case or by default because you did not respond to the lawsuit). Judgment creditors have more options to collect on the judgment than a creditor without a judgment.
A secured creditor has taken a lien on a debtor’s real or personal property in exchange for a loan. In other words, the debtor’s property serves as security for the loan. Mortgage and vehicle loans are some of the most common secured debts, but the security can be virtually any property.
An unsecured creditor does not have a lien on any property. Most credit cards personal loans, medical bills, etc. are unsecured debts.
Quick Note: Although most credit cards are not secured, it is not unusual for store credit card lenders (such as a department store card provider) to claim a security interest in certain items that you purchase with their account.