What You Need to Know About Illegal Debt Collection in Pennsylvania

Last updated:
February 6, 2020

Debt collectors often use intimidation, lies, and harassment to collect debts. Witness the Pennsylvania debt collectors who set up a fake court with phony police, attorneys, and judges. (We'll get to that story below.) Fortunately, with some knowledge, you can protect yourself from unscrupulous creditors, debt collectors, and scammers.

Outrageous Debt Collection Practices

As a Philadelphia bankruptcy lawyer, I have seen all kinds of egregious and illegal actions intended to frighten debtors into paying. They include the following:

  • Calling late at night;
  • Calling multiple times in a day;
  • Calling after being instructed not to call;
  • Lying about the law, who they represent, etc.;
  • Threatening to disclose information to the debtor's friends, family, neighbors, or employers;
  • Trying to collect debts that were paid in full;
  • Trying to collect debts that were discharged in bankruptcy;
  • Threatening to sue a debtor, even though the Statute of Limitations has run out;
  • Threatening to have the debtor arrested;
  • Threatening to charge the debtor with check fraud, or some other made-up offense (a common tactic with payday lenders);
  • Claiming to be police officers, attorneys, or government officials;
  • Showing up unexpectedly at debtors' places of employment or home;
  • Discussing the matter with the debtor's employer, family, or friends;
  • Harassing family members or friends of the debtor;
  • Contacting the debtor at work, even after being instructed not to do so;
  • Threatening to injure or kill debtors or their families.

I have had debtors in my office who were terrified because a debt collector told them that the police were on the way to their home to arrest them. Other clients were suicidal because of some of these despicable and illegal tactics. However, as mean and depraved as these debt collectors are, there are ways to deal with illegal collections tactics.

What you need to know to protect yourself from debt collector scams

Although there are some ethical debt collectors who do not use intimidation, lies, and harassment to collect debts, the industry is rife with depraved characters willing to do anything to get a commission. There are several things you should know to protect yourself from unscrupulous debt collection agencies:

It is not a crime to be in debt.

You cannot be arrested because you owe money to a creditor. (Failure to pay child support is an exception.) As I noted in an earlier post, our country does not have debtors' prisons. Although a creditor may file a civil lawsuit against you to collect a debt, it cannot have you arrested or charged criminally. For a debt collector even to imply that you can be charged with a crime is a serious violation of the law.

Federal and Pennsylvania law severely restricts what debt collectors can and cannot do.

Debt collectors cannot do whatever they like to collect a debt. In another post, I discuss in more detail the restrictions placed on debt collectors by the Federal Fair Debt Collection Practices Act ("FDCPA"). In short, the FDCPA bars debt collectors from taking specific actions, such as making false statements, impersonating the police or government officials, and engaging in other unfair and harassing behavior. Also, the Pennsylvania Fair Credit Extension Uniformity Act (PA-FCEUA) applies similar restrictions to creditors who collect their own debts. There are severe penalties for debt collectors who violate the federal or related Pennsylvania statutes.

Quick Note: Debt collectors often lie about the law, including the Statute of Limitations, bankruptcy, etc. For example, they might tell you that the the Statute of Limitations or even a bankruptcy discharge does not apply to your case. Do believe anything a debt collector tells you about the law without confirming it with an attorney.

You do not have to talk to debt collectors.

If you do not want a debt collector contacting you, you can put a stop to it. Under the FDCPA, if you tell a debt collector in writing to stop contacting you, the debt collector must stop all contact immediately. Although the debt collectors may still file suit, the law prohibits them from calling, writing, or engaging in most other collection activity. The only exceptions are that the debt collector may still send you a letter stating that (1) it will cease contact or (2) it will take specific actions, such as filing a lawsuit.

Quick Note: There is little good that can come from talking to aggressive debt collectors. When debt collectors use intimidating tactics, they are telling you that you cannot trust them. Demand that they put everything in writing, then hang up and call an attorney.

Bankruptcy stops collection action.

If it is appropriate for your financial situation, filing for Chapter 7 or Chapter 13 bankruptcy can stop debt collectors and creditors from taking any collection action against you while your case is pending. (This is the "automatic stay" of bankruptcy). A creditor who continues to try to collect after you file for bankruptcy will find the result unpleasant. However, there are other steps you can take to stop creditor and debt collector harassment that do not involve bankruptcy. An attorney can tell you if a debt collector's tactics are illegal and advise you on the best course of action.

Phony Cops, Fake Courtrooms, and Fictitious Judges

OK, I promised to get back to the story about the fake courtroom. A few years ago, in a spectacular display of hubris, a Pennsylvania debt collection agency in Pennsylvania set up an entire fake legal system complete with a phony courtroom, cops, attorneys, and judges. The idea was to intimidate debtors into paying them by fooling them into thinking they might go to jail.

The audacious scam started with the service of false but official-looking "subpoenas" on debtors by a uniformed messenger who appeared to be a police officer. The phony subpoena, required the debtors to appear at a "debt resolution center." When the debtors reached the address on the subpoena, they found a fake but realistic courtroom with a bench, a witness stand, a 'judge' in a black robe, and people dressed to resemble police officers and attorneys.

The scam was so convincing that some debtors gave the company access to their checking accounts and turned over the titles to their vehicles (in some cases for debts that they believed they did not owe). Although the Attorney General sued and obtained judgments against the now-defunct Unicredit America, Inc. and its owners, the case ultimately settled for a fraction of that amount.

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Philadelphia Bankruptcy Attorney is published by Harborstone Law. Harborstone Law represents clients in bankruptcy and debt relief cases throughout Philadelphia and the surrounding Pennsylvania counties.

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Dan Mueller is a bankruptcy attorney and partner at Philadelphia-based Harborstone Law. Dan helps people and small businesses resolve serious financial and legal issue through bankruptcy and non-bankruptcy debt solutions.
Paul Midzak focuses his practice on debtor defense, dispute resolution, consumer protection law, and Chapter 7 and Chapter 13 bankruptcy. He also advises businesses on a variety of legal matters.
Harborstone Law represents clients in bankruptcy, debt, consumer, and small business matters throughout Philadelphia, Montgomery, Delaware, Chester, Bucks, Berks, Lancaster, Lehigh, and Northampton Counties in Pennsylvania.
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