Pennsylvania Collection Laws
- 7 min read
- 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.
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.
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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.
Know Your Rights - Wage Garnishment
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.
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:
- Credit card debt 42 Pa. Cons. Stat. § 5525 — 4 years.
- Contract for Sale Section 2725 - Title 13 - Commercial Code — 4 years
- Default under a Lease Contract Section 2A506 - Title 13 - Commercial Code — 4 years
- Section 3118 - Title 13 - Commercial Code:
- Note payable at definite time — 6 years
- Note payable on demand — 6 years
- Unaccepted draft — 3 years
- Certified check, teller’s check, cashier’s check and traveler’s check — 3 years
- Certificate of deposit — 6 years
- Accepted draft — 6 years
- Conversion, breach of warranty and other Division 3 actions — 3 years
- Bank Deposits and Collections Section 4111 - Title 13 - Commercial Code — 3 years
- Pennsylvania judgment — 5 years, with writ of revival within 5 years (Pa. R.C.P. Chapter 3025 through 3034)
- Non-Pennsylvania judgment — 4 years
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]).
Know Your Rights - Collection Agents
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 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.
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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If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q4 2022 was $16.91 trillion. Student loan debt was $1.60 trillion and credit card debt was $0.99 trillion.
According to data gathered by Urban.org from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 8% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.
The amount of debt and debt in collections vary by state. For example, in Colorado, 21% have any kind of debt in collections and the median debt in collections is $1682. Medical debt is common and 11% have that in collections. The median medical debt in collections is $693.
While many households can comfortably pay off their debt, it is clear that many people are struggling with debt. Make sure that you analyze your situation and find the best debt payoff solutions to match your situation.
My husband has a judgement against him. Can my belongings be touched in the house too?
Terri Marie, I can't give legal advice, but here is some information for you to consider.
It is my understanding that Pennsylvania follows what is called either tennancy by the entirities or tennancy by the entirety. I recommend that you do so research on this. It offers protections to jointly held assets when the judgment-debtor is one of the two spouses. So a jointly held house that has a lot of equity is not exposed to the collection efforts. I think property you hold solely is not within the reach of your husband's judgment-creditor.
Hello, today I received a phone call stating that a collection agency is starting the process of suing me in court for a car loan from 2012. I never received any letters or phone calls saying I owe any money. Now all of a sudden they are going to try and sue me for $6000 but willing to settle for $1700. Something sounds fishy to me, is there not a statue of limitations pertaining to this? I also a asked for a letter to be sent to me explaining what I owe and was told no and if I called the finance company myself I would be directed back to the collection company. Should I contact a lawyer?
Sarah, please do not take my answer to be legal advice, as I am not an attorney and only attorneys can offer legal advice.
You didn't say when you defaulted on the loan. I assume the 2012 date is when you took out the loan. The statute of limitations on debt for an auto loan in Pennsylvania is 4 years. Has it been more than four years since you made your last payment on the loan? If so, you probably can use the statute of limitation as an affirmative defense if you are sued. There are actions a person can take that stop the clock from running on the SOL. If you are sued, be sure to respond to the paperwork and go to court. It is your responsibility to present the SOL as a defense. Non-appearance in cases like this lead to default judgments.
I have a credit card debt that is being collected by an attorney. My husband is not on it. I live in pa. Can they take my house and belongings? Everything we have is joint? My car we are upside down in the loan. The house and everything we have inside is joint. I don’t work and I don’t have a lot of money in the bank. What can they do? Can they take my house and everything we have inside our house?
Diana, I will share some information with you. It is not to be taken as legal advice, which only a lawyer can provide. In fact, given the serious possible consequences I feel you should speak with a lawyer and discuss this matter.
My understanding is that Pennsylvania views your jointly owned home as governed by tenancy by the entireties. This means that your home is viewed as 100% owned by you and your husband, individually, and a creditor can't take the property of a non-debtor spouse. If you and your husband owed the debt, it would be different. I believe that your car, if jointly owned, would have the same protection. I don't think it applies to a bank account, however, so funds in any account with your name on it are at risk, once a judgment exists against you.
Again, because we are talking about a threat to such a valuable asset as your home, I suggest you verify with an attorney that my understanding of tennancy by the entreaties is accurate and clearly define if your bank account is exposed to funds being taken..
Hello, can the same creditor attach my wages and levy my personal property at the same time? Thanks.
Jay, I am not a lawyer, so my answer is not to be taken as legal advice.
A judgment creditor is not restricted to one method of collecting on a debt. As long as the debts are collected consistent with the laws of the state, you could have a bank account levied, wages garnished, non-exempt property seized, and a lien filed against you that encumbers property you own.
Are your wages are being garnished? You asked your question on our Pennsylvania Collection Laws page and wages are protected from garnishment in the Keystone State, for most types of debt.
Own my home JTWROS with my father. Estate planning reasons. My father purchased this home, and a I live there alone. SFR. No mortgage. I fell behind on some unsecured credit card bills due to the pandemic. Not employed. I have a law firm trying to settle those debts. My question is whether a creditor could obtain a judgment (none of these selected creditors have agreed to settle BTW), and then Ike a line on this property, and then sell it to recoup their lien $ amount(s)? My father is not a party to any of this debt. Not like a H&W scenario. Thanks.
Thank you for reaching out.
Please, do not take my answer to be legal advice as I am not an attorney. Only attorneys can offer legal advice.
According to the article, if you're a resident of Pennsylvania, the creditor could be awarded a judgment and put a lien on your property. So that, if you sell or refinance you would need to pay the debt first before the completion of the transaction.
I would recommend speaking to an attorney to get accurate details of your situation.