Legal Question in Credit and Debt Law in Pennsylvania

I'll answer these in reverse orderr.

Yes, there is a statute of limitations (SOL) in PA and every other state. Generally, if the debt was created in PA the SOL is 4 years. If the debt was created in another state that allows a longer SOL, it may be that the longer SOL will govern. The SOL begins to run from the date of your last payment. That means the creditor has 4 years from the date of your last payment to sue.

That said, there are some sleazy lawyers and creditors or junk debt buyers who may try to sue after the SOL has expired. If that happens, get to a credit card defense lawyer immediately. The time to answer a complaint in PA is 20 days. If you don't assert the SOL in your answer it is waived - meaning you lose it. A good credit card defense lawyer will be able to get the case dismissed if the SOL has indeed expired and the lawyers who do this are not all that expensive. I do not work for this attorney or get any money for referring clients to him - but here is one that I know of in the Pittsburgh area that does this kind of work:

http://www.gregartim.com

I am sure that there are others as well.

Also, even if a creditor or junk debt buyer will not sue, that does not mean that they can't keep trying to collect the debt. They can call and write. If you make any payments at all, a payment will revive the SOL. So if it has expired, let them call and tell them to go pound sand because you are not paying.

The exception is where you need credit - a car loan, or to refinance your house or some other credit. Debts can stay on your credit report even after the SOL has expired. Debts can stay on your report 7 years from the date the debt is first sent for collection or charged off. Bottom line - if you need credit and the SOL has expired, you negotiate a settlement, get the settlement terms in writing and then you settle the debt, so that the debt will be reported as settled when you go to apply for the credit. If you do not need credit, then you don't pay the debt if the SOL has expired and the debt will eventually drop off your credit report. All of this applies only if there is no judgment against you.

Now for the questions about a judgment. A money judgment is a direction by the court stating that you owe someone money - like a credit card company or a junk debt buyer. They mean nothing in and of themselves. Its their effect though that can harm you. A judgment acts as a lien on real property that you own. Its automatic. So if you go to sell your home, the judgment creditor will snatch any equity and apply it to the judgment. If your home is mortgaged, the judgment creditor probably will not make you sell your home but it depends on how much equity is in your home. There is no homestead exemption in PA at all. If your home is owned free and clear, then the judgment creditor might be able to force a sale should they choose to do so.

There is no wage garnishment in PA for most debts (there are some exceptions, like for back rent owed to a landlord). Things like IRAs, pensions, unemployent or Social Security benefits are exempt. Exempt means the creditor cannot touch it. You can keep $300 or less in the bank. Anything over that and creditors will freeze your bank account and take any funds in there. I advise clients to bank at a very small bank, credit union, online bank or, if they live close to the state border, in a bank in a neighboring state to protect themselves as much as possible from execution.

There are a few other exemptions in PA found in 42 PA CSA Section �� 8123 - 8124. However, your household furnishings mostly are not exempt. I had one judgment creditor threaten to hold a sale of my client's property! So they will try and do this, depending on the creditor.

If you cannot pay or work out arrangements, then the only option in such a case is to file bankruptcy to stop the creditor from selling your assets. Bankruptcy is what I call the "nuclear" option. It is only to be used when all other means fail as it has its own consequences. You should consult a bankruptcy attorney if a judgment will soon be or has been entered against you and you will not have the rmeans to repay it. Many bankruptcy attorneys will give free consults. You should get a consult to find out more specifically about bankruptcy. Just because you get a consult does not mean that you have to file right now. Bankruptcy can be filed at any time - before, during or after a judgment.

Judgments should be resolved, but it depends on your circumstances. If you are 93, have dementia and are in assisted living and on Medicaid, I would not worry about either the judgment or filing bankruptcy. However, if you are in your 40s and are going to be needing credit in the future, then you do need to think about how you will resolve the judgment.

The judgment is reported on your credit report for 10 years from the date it is entered. After 10 years, it does not go away. It never goes away. It just means that it will be on your credit report and with an unpaid judgment, it will be just about impossible to get a home or some other kind of loan at a favorable rate.

Judgments on real property are good for 5 years and can be renewed every 5 years after that in PA. Even though not renewed, they are still there - it just means that the judgment cannot be executed on if not renewed. Judgments on personal property (like your bank account or car or home furnishings) are good for 20 years.

I don't know about your debts and assets or your circumstances. I give free consults via email if you want to contact me, I can be reached at [email protected]. If this is your only debt, I assist clients in resolving their debts privately for a reasonable fee.

If you have several debts, but are not in a position to file bankruptcy for whatever reason, consider a debt settlement company. I provide legal services to the clients of the debt settlement company listed below. There are many scam artists in the industry - be careful. However, the company below is legitimate and I invite you to check them out:

http://www.national-legal-center.com

If you wish to consolidate your debts and get on a debt management plan, try www.nfcc.org and find a local agency in your area.

Most of my advice is tailored to PA law. Different states have different laws - for example, some states do allow wage garnishment, like Georgia. So if you have an employer in one of those states, the judgment creditor can take the PA judgment and have it entered in that state where you have an employer or where you have property, register the judgment and have it enforced just like it was a judgment of that state. My point is not to scare you, but to let you know that if there is a possibility of a judgment being registered and enforced in another state, then you would have to consult an attorney licensed in that state to advise you about that state's law.