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.

n 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]).

ollection 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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  • JP
    Apr, 2013
    Jared
    I have a bill that is past due and was sent to a collection agency and I was given two weeks to respond and I can't find the letter to contact them. The two weeks is up today or tomorrow. What's next? What can I do?
    0 Votes

    • BA
      Apr, 2013
      Bill
      If you cannot recall any facts about the name or contact information about the collection agent, you have two options:
      • Call the original creditor and ask for the name of the collection agent it assigned your collection account to.
      • Wait for the collection agent to contact you again.

      A less-reliable third option is to access one of your three credit reports at AnnualCreditReport.com to see if the name and telephone number of the collection account in question is listed on that credit report.

      0 Votes

  • JS
    Mar, 2013
    Joe
    First off, I live in Pennsylvania if that makes any difference (I don't know about state laws and the difference between states regarding this matter) In 2002 I defaulted on two credit cars for a combined total of $600 ($300 each). I was young and fully admit it was stupid but I really didn't have the money (plus, I used the cards to actually pay utility bills and rent not frivolous other things). After a few years I started getting calls and some letters from collection agencies so I made a few payments but nowhere near the amount required to erase the debt. The last payment I made was in the summer of 2007 and haven't made one since. Since then I've gotten a few phone calls and letters and each time the debt increases. I've had them call me at work and call the house I grew up in and every time I told them to call me after work hours and do not call my parents house...but that never really stopped them for they continued to call at those times and my parents despite the fact I haven't lived in their house since 1997 and my address was officially changed to my current residence in 2004. I've read before that I have some rights regarding this yet they continued to ignore that...don't know if that matters in my case or not. Anyway, just recently I got a letter from a collection agency that has never contacted me nor have I heard of stating my debt is now an astronomical $1800 (not the original $600) the letter said they reserve the right to file a lawsuit on me to recover the debt and that they can garnish my wages or garnish my bank account. I would just like to know what are my rights regarding this matter as a resident of Pennsylvania? I understand how debt collection works but I think it's absurd for them to charge me 3 times the original debt especially when I've already made several payments in the past. If the debt is lowered to what it originally was ($600) or relatively close to that amount that would be much more manageable for me. Thanks for any advice and answer....
    0 Votes

    • BA
      Mar, 2013
      Bill
      Reread the article above to understand your rights as a Pennsylvania resident.

      Credit card collection accounts are bought and sold for pennies on the dollar. When the original creditor sold the account with the $600 balance to a broker or collection agent, it did so for about $50. Most states allow collection agents to add a certain amount of annual interest to collection accounts, and without doing the math it appears the collection agents exceeded most states' usury rate by a wide margin.

      Armed with what I just wrote, open a negotiation with the newest collection agent and offer it $100 as a final settlement on the account. It may feign offense at you offering it what might appear to be a small amount. That's part of the game. If it will not negotiate reasonably, then invite it to file a lawsuit against you so that it can try to explain how a $600 debt became an $1,800 debt over the course of 6 years, and how that complies with Pennsylvania's usury law.

      If you find yourself a defendant in a civil lawsuit, consult with a lawyer who has consumer law or civil litigation experience.
      0 Votes

  • SG
    Jun, 2012
    sally
    settled all my debt how long can ca or original debtor report in pa anything i can do to delete sooner
    0 Votes

    • BA
      Jun, 2012
      Bill
      Sally, your debt will remain on your credit report for 7½ years from the time of your first delinquency. There is not much you can do, at this point, to have the account deleted. It would have been best to try to negotiate a pay for delete at the time you were settling the account.

      You can try the methods that credit repair companies use, by hiring a credit repair firm or trying it on your own.
      0 Votes

  • RZ
    Apr, 2012
    Rachel
    I currently live in PA. I owe Sallie Mae almost $50,000 in student loan debt. I used all my forbearance time and cannot afford the monthly payments. I have two sons to take care of. I do work and am barely able to make enough to take care of my household. Are they able to garnish my wages or touch my one of my son's SSi benefit? And if I move to another state does this change?
    0 Votes

    • BA
      Apr, 2012
      Bill
      In the past, Sallie Mae offered both private and federal student loans. Go to the Sallie Mae Web site, or review your Sallie may loan documents and monthly statements to learn if your loans are private, federal, or both.

      For your private loans, read the Bills.com articles Sallie Mae Forbearance & Deferment and Private Student Loan Default to learn about your options.

      For your federal loans, read the Bills.com article Default on Federal Student Loan to learn your options.

      You mentioned your son's Social Security benefit. This is not available to the Dept. of Education for two reasons. First, unless your son was the borrower or co-signer, your son does not have liability for your student loan debt. Second, assuming he did have liability, it is unlikely the Dept. of Education could reach this benefit. See the Bills.com resource, Social Security Benefit Garnishment. The no-garnishment-of-Social-Security rule is federal and applies to all states.
      0 Votes

  • DO
    Mar, 2012
    Dave
    My Father in law has a judgment against him in the state of PA. The creditor has issues a form for interrogatories. Does the creditor have the "right" for all his financial information? I have done some reading and I think the sheriff has to order this, but I am not sure.
    0 Votes

    • BA
      Mar, 2012
      Bill
      Impossible for us to answer without seeing the documents you received. In most instances, a defendant is compelled to answer interrogatories. In this case, your "interrogatories" may be tarted-up questions wrapped in legal veneer you may have no obligation to answer. Take the documents to a lawyer who has consumer law experience in your state. He or she will tell you in an instant if you must answer the questions, and what the consequences are if you do not.
      0 Votes