A guide to Pennsylvania’s debt collection laws

Numerous innovations can be traced back to Pennsylvania. Inventors from the state brought us the Slinky, No. 2 pencils, candy corn, and Monopoly. Pennsylvania is also home to some pivotal historical events.

Our nation's founding documents, including the Declaration of Independence and the United States Constitution, were signed there. Pennsylvanians have helped propel this country forward, but residents struggle to remain debt-free.

Therefore, it is crucial to discuss Pennsylvania's debt collection regulations. By understanding the debt collection rules, Pennsylvania people can be aware of their rights, and this will assist them in comprehending the illegal debt collection techniques employed by debt collectors.

Fair Credit Extension Uniformity Act - Pennsylvania debt collection laws

Although most people are familiar with the federal Fair Debt Collection Practices Act, which places limitations on debt collectors, few are aware of the Pennsylvania law, which largely mirrors the federal one.

The FCEUA, or Fair Credit Extension Uniformity Act, restricts debt collectors and the people and businesses trying to collect debts on their behalf.

The FCEUA encompasses federal law but provides extra protections for Pennsylvania consumers who owe money to individuals or businesses trying to collect their debts. This includes any past-due charges for the sale, loans, or lease of:

  • Goods and services.
  • Property items that serve domestic or personal needs.

The FCEUA definition of debt does not cover purchase-money mortgages for real estate. However, there are home equity loans available. It does not apply to federal or state taxes in Pennsylvania. However, it does apply to taxes, fines, and interest imposed by local governmental subdivisions.

What is unlawful communication under FCEUA?

The FCEUA protects Pennsylvania consumers from creditors who engage in predatory or illegal practices. For instance, creditors who call a debtor's home or place of business to demand payment must identify themselves and provide proof of who they are before receiving any address or contact details.

  • Disclosing the existence of any consumer debt
  • Repeatedly contacting a customer to verify their location, unless the first update was inaccurate;
  • Indicate on the envelope or letter that the contents are being sent to recover a debt; and
  • Involving an attorney in conversations about consumer debt

In addition to protecting communications related to location information, the FCEUA also protects other communications.

For instance, creditors can't contact people about debt collection at inappropriate times or places. This also applies to messages sent or received before 8:00 a.m. or after 9:00 p.m.

Creditors are prohibited from contacting a consumer at work if the consumer's employer prohibits such interaction.

How long before a debt collector can file a debt collection lawsuit against you in Pennsylvania?

It's natural to be confused about what to do if a debt collector sues you for an old debt. You are required to submit an answer to the lawsuit even though it may be tempting to dismiss it, mainly if the debt has passed its statute of limitations.

One of your strongest possible counterclaims would be the statute of limitations. You must understand how the statute of limitations can protect you before pursuing other options, such as debt repayment plans, creditor negotiations, or bankruptcy filings.

Pennsylvania's statute of limitations on debt is set at four years. This applies to unsecured loans, oral contracts, open-end accounts, revolving credit, promissory notes, and written agreements. As a result, the creditor has up to four years from the date you breached or defaulted on the contract to file a lawsuit against you. If the creditor fails to take action within that time frame, they will lose the right to pursue payment.

Pennsylvania Statutes of Limitation

  • Written contracts: four years (under seal: 20 years)
  • Oral contracts: four years
  • Judgment: four years
  • Auto loans: four years
  • Rent: 21 years
  • Debt on account: two years
  • Private student loans (not government-backed): four years
  • Secured loans on personal property: four years
  • Second and subsequent mortgages rendered unsecured by foreclosures: four years

The four-year statute of limitation does not apply to all types of contracts

Here are the few situations where the four-year limitation does not apply:

Contracts under seal

The four-year limitation period does not apply to any contract or document with the word "seal" in the signature block. Mortgage loans and certain other promissory notes are two common types of documents that require a seal.

Unless another law specifies a different time limit, the statute of limitations for such papers is 20 years.

Mortgage loans

It is not required by Pennsylvania debt collection law that a mortgage lender initiate foreclosure within a certain amount of time following a default. However, it is argued that the statute of limitations for mortgages signed under a seal should be twenty years.

The only statute of limitations for mortgage loans stipulates that first mortgage lenders must seek a deficiency judgment no later than six months after a sheriff's sale.

Taxes

When it comes to paying state and local taxes, the statute of limitations in Pennsylvania does not apply. However, there is a ten-year limit on when the IRS has to pursue a federal tax debt in Pennsylvania. Bankruptcy filing is the only way to pay federal, state, and local income taxes.

Civil fines

Criminal fines, restitution, parking tickets, and other governmental obligations may be subject to civil penalties. However, the Pennsylvania statute of limitations for civil fines is much longer than four years.

Federal-backed student loans

Only private student loans in Pennsylvania are subject to the state's statute of limitations. Federally supported student loans are not subject to any kind of time limit.

Domestic support obligations

Domestic support obligations, including child support, alimony, and maintenance, are immune from the Pennsylvania statute of limitations.

Events that can restart the statute of limitations

The statutes of limitations aim to protect the debtor from being sued by the creditor for an expired debt. But there are specific situations where you can reset the statute of limitations, enabling the debt collector to issue a collection lawsuit against you.

Here are some of the actions that can reset the statute of limitations:

Acknowledging the debt

If an old creditor contacts you, you should always proceed with caution. They may pressure you into making a verbal or written commitment to pay the debt, which would restart the clock on the outstanding balance. Debt collectors can be aggressive, so it may be best to seek the advice of an attorney.

Agreeing to enter into a payment plan

Sometimes a creditor will offer to forgive all or part of your debt in exchange for a reduced payment. In contrast, if you enter into a debt settlement plan, the statute of limitations will begin running again on the entire outstanding balance of your debt.

Making a payment of any amount

You may receive a call from a collection agency, and some may try to convince you to make a small payment as a good-faith gesture. For example, let's say you're duped into parting with $10.

In that case, the creditor will have more time to attempt to collect the debt or file a collection lawsuit against you, as the statute of limitations will reset once the payment is made.

Making a charge on the account

If you make a purchase using an expired credit card, the statute of limitations begins again from the date of the purchase.

Bottom line

No matter where you live, debt can harm your life and financial health. Therefore, knowing your state's debt collection laws is paramount. They will help you understand your rights; that way, you can take the necessary steps to handle a debt collection situation.

It may be fruitful to seek the help of an attorney with experience in debt collection who can help you navigate the process. Furthermore, you must learn about various debt relief programs or methods that may help you get rid of debt.

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