There are important limitations on debt collection in Pennsylvania. However, unscrupulous 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 debt collectors.
Debt settlement can be a good option for resolving debts, including judgments. Many creditors will negotiate lump-sum settlements of debts or, in some cases, payment arrangements.
However, negotiating with creditors or debt collectors without the asistance of an attorney can be costly. Often, an attorney can help you reach a much better settlement than you could reach on your own. However, debt settlement can have tax and other financial consequences.
It is important to explore all of your options before committing to debt settlement. At the least, before entering into negotiations with a creditor over any significant debt, be sure to speak to an with an experienced debt settlement 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 or there are other jurisdictional problems with the case. However, the debtor must have 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, married couples typically hold their joint real and personal property as "tenants by the entireties." A judgment creditor of one spouse cannot execute against such joint marital property, including homes, joint bank accounts, vehicles, etc. Thus, if a creditor sues and obtains a judgment against one spouse, its only remedy is to collect against the individual property of the spouse against whom it has a judgment.
However, tenancy by the entireties does not protect a married couple’s property against their joint creditors. In other words, if you owe a joint debt with your spouse, your joint marital property is not protected by tenancy by the entireties. Also, 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. (In some instances, the proceeds of the sale of joint property may still be protected by tenancy by the entireties.)
Tenancy by the entireties is a powerful tool for protecting joint assets against aggressive creditors. In addition to its usefulness as a defense against collection, a skilled bankruptcy attorney can use the doctrine of tenancy by the entireties to help married debtors eliminate individual debts in Chapter 13 bankruptcy that might otherwise have been paid.
QuickNote: Authorized users on a credit card or other credit account are not joint debtors unless they co-signed for or guaranteed 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 confusion if filing for bankruptcy or using a tenancy by the entireties defense.