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Pennsylvania Collection Laws

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Highlights

  • Wage garnishment is not allowed in Pennsylvania, with three exceptions.
  • The statute of limitations for most consumer debt is 4 years, but a federal court decided otherwise recently.
  • The account levy exemption amount is low -- $300.
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What are my rights and liabilities for debt collection in Pennsylvania?

A collection agent or law firm that owns a collection account is a creditor. A creditor has several legal means of collecting a debt. But before the creditor can start, the creditor must go to court to receive a judgment. See the Bills.com resource Served Summons and Complaint to learn more about this process.

The court may decide to grant a judgment to the creditor. A judgment is a declaration by a court that the creditor has the legal right to demand a wage garnishment, a levy on the debtor’s bank accounts, and a lien against the debtor that affects the debtor’s property. A creditor that is granted a judgment is called a "judgment-creditor." Which of these tools the creditor will use depends on the circumstances. We discuss each of these remedies below.

Pennsylvania Wage Garnishment

The most common method used by judgment-creditors to enforce judgments is wage garnishment. A judgment-creditor contacts your employer and requires the employer to deduct a certain portion of your wages each pay period and send the money to the creditor.

In most states, creditors may garnish between 10% and 25% of your wages, with the percentage allowed determined by state law. Garnishment of Social Security benefits or pensions for consumer debt is not allowed under federal law, but may be allowed for child support. See the Bills.com Wage Garnishment article to learn more.

There is no wage garnishment in Pennsylvania, with three exceptions. The exceptions are landlord-tenant cases, child-support cases, and federal administrative wage garnishment actions, such as delinquent federal student loans. However, bank levies, which are called bank garnishments in Pennsylvania, are permitted (see below).

Under Pennsylvania law, arrearages in child support payments may result in attachment on wages as set forth in Section 4348 - Title 23 - Domestic Relations, regulated by the Consumer Credit Protection Act. Arrearages in child support payments may also be recovered from lottery winnings as set forth in Section 4308 - Title 23 - Domestic Relations.

Levy Bank Accounts

A levy means that the creditor has the right to take whatever money in a debtor’s account and apply the funds to the balance of the judgment. Again, the procedure for levying bank accounts, as well as what amount, if any, a debtor can claim as exempt from the levy, is governed by state law. Many states exempt certain amounts and certain types of funds from bank levies, so a debtor should review his or her state’s laws to find if a bank account can be levied. Some states call levy attachment or garnishment.

In Pennsylvania, a bank account levy is allowed under Section 9607 - Title 13 - Commercial Code, but only after judgment is awarded. Pennsylvania has a $300 statutory exemption for account levy (42 Pa. C.S.A. Section 8123). Marital assets are exempt, and banks must notify the creditor of recurring electronic deposits, such as payroll, Social Security benefits, disability payments, and so on, that might be exempt if the account contains less than $10,000. All garnishments and levies in Pennsylvania must be served by the sheriff.

If you reside in another state, see the Bills.com Account Levy resource to learn more about the general rules for this remedy.

Pennsylvania Lien

A lien is an encumbrance, a claim, against a debtor that affects the debtor’s property. For example, if the debtor owns a home, a creditor with a judgment has the right to place a lien on the home, meaning that if the debtor sells or refinances the home, the debtor will be required to pay the judgment out of the proceeds of the sale or refinance, after satisfying any liens that are in line ahead of one associated with the debt, such as any mortgages on the property. If the amount of the judgment is more than the amount of equity in your home, then the lien may prevent the debtor from selling or refinancing until the debtor can pay off the judgment.

Under Pennsylvania law, Section 5107 - Title 12 - Commerce And Trade, "If a creditor has obtained a judgment on a claim against the debtor, the creditor, if the court so orders, subject to the limitations of sections 5108 and 5109, may levy execution on the asset transferred or its proceeds. Notwithstanding voidability of a transfer or an obligation under this chapter, a good faith transferee or obligee is entitled, to the extent of the value given the debtor for the transfer or obligation, to: (1) a lien on or a right to retain any interest in the asset transferred.

If you reside in another state, see the Bills.com Liens & How to Resolve Them article to learn more.

Pennsylvania Statute of Limitations

Each state has its own statute of limitations on judgments. Under Pennsylvania law, the following statute of limitations apply:

For credit card and other forms of consumer debt, most Pennsylvania judges apply a 4 year statute of limitations. In 2012, however, a Pennsylvania federal court created a two-step analysis in determining which statute of limitations applies in cases where the lender is headquartered outside Pennsylvania and has a statute of limitations shorter than Pennsylvania's. The court looked at the choice of law provision in the contract (a credit card agreement) and then looked at the place where payments were to be sent. The court found the failure of the creditor to receive the payment in its state was the injury, triggering that state's statute of limitations (Hamid v. Stock & Grimes, LLP, PICS Case No. 12-1179 [E.D. Pa. June 12, 2012] applying the Pennsylvania Uniform Statute of Limitations on Foreign Claims Act, [42 Pa. Cons. Stat. Section 5521b]).

Collection agents violate the FDCPA if they file a debt collection lawsuit against a consumer after the statute of limitation expired (Kimber v. Federal Financial Corp. 668 F.Supp. 1480 (1987) and Basile v. Blatt, Hasenmiller, Liebsker & Moore LLC, 632 F. Supp. 2d 842, 845 (2009)). Unscrupulous collection agents sue in hopes the consumer will not know this rule.

Pennsylvania Foreclosure

Pennsylvania foreclosure laws can be found in conjunction with the various types of real property such as Planned Communities, Condominiums, and Co-ops. To learn more about the rules surrounding foreclosure in this state, including deficiency balances please refer to Title 68 - Real and Personal Property. Pennsylvania has a deficiency judgment rule as described in Section 8103 - Title 42 - Judiciary And Judicial Procedure. A lender can sue for deficiency within six months after the foreclosure.

Recommendation

Consult with a Pennsylvania state attorney experienced in civil litigation to get precise answers to your questions about liens, levies, and garnishment in Pennsylvania. If you cannot afford an attorney, you can navigate the process yourself by taking advantage of the Pennsylvania court’s self-help resources — for example, you can find general information in the FAQ section, while many of the forms you will need are available for download at the Pennsylvania Unified Judicial System forms page. Again, you should find an attorney if possible, but if you cannot, the resources listed should prove helpful.

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  • ES
    Apr, 2014
    Erika
    I came across this post and it is great. I recently had a writ of execution go out against my bank account last week. How long can a creditor keep the funds in your account frozen? Also, are deposits from court-ordered child support exempt under PA state law?
    0 Votes

    • BA
      Apr, 2014
      Bill
      Consult with a Pennsylvania lawyer about your excellent questions immediately. If you cannot afford a lawyer, contact PA Law Help or another Pennsylvania pro bono program to find no-cost legal assistance.
      0 Votes

  • JR
    Apr, 2014
    Joe
    We had a credit line with wells fargo for 40,000.00. They filed a civil case in 2007. we entered into a settlement & paid it down to 18,000.00 but times got tough and our last payment was 4 years ago. never heard from them, till this week got a letter from patenaude & Felix for set 1 of interrogatories. They want to know balance, dates of payments from us. What should I do?
    0 Votes

    • BA
      Apr, 2014
      Bill
      Consult with a lawyer in your state immediately.
      0 Votes

  • SO
    Feb, 2014
    Steve
    I had a charge off with Discover, they sued me in court in PA and I won. They continue to report the account as delinquent on my credit, they just reported in Jan 2014, I won Judgement in 2011, and the account was charged off in early 2009, maybe November/December. Two questions:
    1. Can they still report this to the consumer credit reporting agencies given the fact I won the case (actually dismissed with prejudice)
    2. If they can report, when will they stop reporting?

    Thanks, Steve

    0 Votes

    • BA
      Feb, 2014
      Bill
      Regarding your first question, I am not aware of any rule that requires the big-three consumer credit reporting agencies to remove a derogatory under the circumstances you described. Let me put this way: Courts look at levels of proof when deciding cases. I'll use a human body as a yardstick. To be convicted of a crime, the level of proof must go from the floor to your chin. In a civil case, the level of proof must reach your waist. The level of proof for a credit report needs to touch your ankles. In other words, your state court dismissed the case with prejudice, but that doesn't mean the creditor can't report the account on your credit reports.

      This derogatory may appear for 7 years after the date of first delinquency. The date of charge-off is not the relevant date. My guess is your date of first delinquency was 90 to 120 days before the charge-off date.
      0 Votes

  • MG
    Feb, 2014
    Michelle
    I have an old Citi card debt. I just received a call from Pressler and Pressler stating that they were filing suit against me. What is the statute of limitations on this kind of debt in PA?
    0 Votes

    • BA
      Feb, 2014
      Bill
      The SOL for credit card debt in PA is 4 years, aside from the exception explained in the statute of limitations section above. If you are sued, you should speak with an attorney and discuss using the SOL as a defense.
      0 Votes

  • RD
    Feb, 2014
    Ryan
    I had a civil judgment placed against me in October of 2003 at the county level in the state of Pennsylvania. The judgement was for $4,000 on a car that was repossessed. I never responded to the judgement, so it went on my credit as bad debt. After 5 years, which is the statute of limitations for civil judgments in Pennsylvania, the bank decided to revive the judgment. The revival was filed in December 2008, and I never responded to this judgement. Now another 5 years later, the bank has filed another Praecipe for Writ of Revival. Here are my thoughts...

    The time frame in which the most recent Praecipe for Writ of Revival was filed is over 5 years ago (December 2008 to January 2014). According to the Pennsylvania Code, Chapter 3000 Judgments Subchapter B. Revival of Judgement Liens Rule 3025 Commencements and Proceedings, it says that "Section 5526(1) of the Judicial Code, 42 Pa.C.S. § 5526(1), requires that an action for revival of a judgment lien on real property must be commenced within five years." My interpretation from this is that the statute of limitations has elapsed and I should not be liable for this debt. Is this a correct interpretation?
    0 Votes

    • BA
      Feb, 2014
      Bill
      Your question boils down to, "Can a Pennsylvania judgment be revived/renewed more than once?" My guess is no. (See US v. Shadle, 1992 WL 551290, 16 Pa D & C 4th 297 (Common Pleas 1992).) Consult with a Pennsylvania lawyer, which I am not, to learn the right answer. If Shadle is still the authoritative case on this matter, then ask your lawyer how to file an objection to the judgment-creditor's Writ of Revival.
      0 Votes