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Pennsylvania's debt collection laws are stricter compared to federal regulations, offering more protection to consumers. Key highlights include:
These regulations make Pennsylvania unique in its approach to debt collection, emphasizing consumer rights and strict compliance standards.
The Fair Credit Extension Uniformity Act (73 P.S. § 2270.1 et seq.) is Pennsylvania's primary law governing debt collection practices. Enacted on June 26, 2000, it serves as the state-level equivalent to the federal Fair Debt Collection Practices Act (FDCPA). This law specifically addresses consumer debt, which includes obligations related to personal, family, or household needs, such as goods, services, and home equity loans. However, it does not cover purchase-money mortgages on real estate or taxes owed to the federal government or Pennsylvania.
What sets the FCEUA apart is its broader scope - it applies not only to third-party debt collectors but also to original creditors. This dual coverage provides added protections for consumers and establishes a more robust regulatory framework than federal law alone.
"The FCEUA is Pennsylvania's analogue to the FDCPA and applies to both debt collectors and creditors." - Jorge Pereira, Esq., Prince Law Offices
The FCEUA incorporates the FDCPA by reference, meaning that any violation of the FDCPA is automatically a violation of the FCEUA as well. This alignment ensures clear boundaries for debt collectors' behavior, as outlined below.
The FCEUA lays out specific rules for debt collectors to follow. For instance, collectors are only allowed to contact consumers between 8:00 a.m. and 9:00 p.m. local time. If a consumer notifies the collector that their employer prohibits personal calls at work, the collector must stop calling the workplace. Additionally, if the consumer has legal representation, the collector is required to direct all communication to the attorney.
Certain behaviors are strictly off-limits. Collectors cannot use threats, profane language, or make repeated calls intended to harass. They are also prohibited from pretending to be attorneys, government officials, or affiliates of state or federal agencies. Misrepresenting the debt amount or making false claims about actions they do not intend to take are also violations. Publicly shaming consumers by publishing their names, often referred to as "shame lists", is banned, with the exception of reporting to consumer credit agencies.
When reaching out to third parties to locate a debtor, collectors must identify themselves but cannot disclose that the consumer owes a debt. They are also limited to contacting the same third party only once in most cases. Even the format of communication is regulated - postcards are not allowed, and envelopes must not include any language or symbols suggesting the correspondence concerns debt collection, aside from the sender's name and address.
Pennsylvania Debt Statute of Limitations by Debt Type
In Pennsylvania, most debts come with a four-year statute of limitations. This applies to credit card balances, medical bills, personal loans, oral agreements, written contracts, and promissory notes. The clock starts ticking from the date of the first missed payment or the last payment made.
"The statute of limitations for all debt contracts in Pennsylvania is four years." - Attorney Tina Tran, Upsolve
However, not all debts follow this four-year rule. For example, first mortgages on real estate, federal student loans, federal income taxes, and Pennsylvania state taxes have no statute of limitations, allowing creditors to pursue these obligations indefinitely. Additionally, promissory notes signed "under seal" may carry a much longer limitation period - up to 20 years.
| Debt Type | Statute of Limitations |
|---|---|
| Credit Card Debt | 4 Years |
| Medical Bills | 4 Years |
| Personal Loans | 4 Years |
| Oral & Written Contracts | 4 Years |
| Promissory Notes | 4 Years (unless under seal) |
| First Mortgages | No Limit |
| Federal/State Tax Debt | No Limit |
| Federal Student Loans | No Limit |
Understanding these time limits is crucial for determining how legal actions and debt collection efforts are handled.
Once the statute of limitations expires - after four years for most debts - the obligation becomes "time-barred." While the debt itself doesn’t disappear, creditors lose the right to sue you in court if you invoke the expired statute as a defense. However, ignoring a lawsuit can lead to a default judgment, even for time-barred debts.
It’s important to note that any action, such as making a payment, acknowledging the debt in writing, or entering a new payment agreement, can restart the four-year clock. This makes it critical for both consumers and debt buyers to carefully track the timeline. Filing lawsuits on time-barred debts can lead to violations of the Fair Debt Collection Practices Act (FDCPA). Consumers should also request debt validation within five days of initial contact to confirm the debt’s age and legitimacy.
The statute of limitations is separate from credit reporting rules. Negative items, regardless of collectibility, can remain on your credit report for seven years. Additionally, Pennsylvania law gives consumers two years to sue for state law violations and one year for violations under the federal FDCPA.
Pennsylvania takes a unique approach to licensing debt collectors. Unlike some states, it doesn’t require a specific state license, bond, or fee for general debt collection agencies. This applies to businesses that handle or purchase general commercial debts, as long as they adhere to the Fair Credit Extension Uniformity Act (FCEUA) and Unfair Trade Practices and Consumer Protection Law (UTPCPL). Noncompliance can lead to serious consequences, including third-degree misdemeanor charges.
"Whoever violates any of the provisions of this section is guilty of a misdemeanor of the third degree." - 18 Pa. Cons. Stat. Ann. § 7311
For companies operating under the Debt Management Services Act, the requirements are more specific. These businesses must secure a $5,000 surety bond and renew their license annually by September 30. A background check is also part of the process, although individual collectors do not need to register.
"Operating without proper licensing could result in fines or being prohibited from conducting business in the state." - Cornerstone Licensing
Similarly, businesses involved in consumer lending must meet distinct requirements under the Consumer Discount Company Act (CDCA).
While general debt collection doesn’t require a separate state license, companies originating consumer loans of $25,000 or less with interest rates above Pennsylvania’s 6% legal limit must obtain a CDCA license from the Pennsylvania Department of Banking and Securities.
However, CDCA licenses are only available to corporations - not sole proprietorships or partnerships. These licensees must display their corporate or fictitious name at their business location and keep copies of all advertising materials for at least six months after they’ve been made public. Additionally, default charges are capped at 1.5% per month on overdue amounts.
A 2024 court decision further clarified the scope of the CDCA. According to the U.S. Court of Appeals for the Third Circuit, the CDCA primarily governs active loans and doesn’t apply to debt collection. This means that unlicensed entities can legally purchase and collect on charged-off debts.
"The CDCA is a loan statute, not a debt collection statute." - U.S. Court of Appeals for the Third Circuit
When it comes to selling active loan contracts between CDCA licensees, prior written notification must be provided to the Secretary of Banking. This notification must include details like the names and addresses of both parties, the types of loans, the number of contracts, and the total principal balances. If contracts are sold to unlicensed entities, prior written approval from the Secretary is generally required.
Pennsylvania law draws a clear line between acceptable debt collection practices and harassment. The Fair Credit Extension Uniformity Act (FCEUA) governs the behavior of both third-party collectors and original creditors, ensuring strict adherence to ethical standards.
Debt collectors face firm communication rules. They are prohibited from contacting consumers before 8:00 a.m. or after 9:00 p.m. Additionally, they can only call about a specific debt once per week or up to seven times within seven days. If a collector knows that a debtor’s employer doesn’t allow personal calls at work, contacting the debtor at their workplace is also off-limits.
Harassment, as defined by Pennsylvania law, includes actions like threatening violence, using obscene language, or impersonating attorneys or government officials. Collectors are also prohibited from falsely accusing debtors of crimes or using documents that mimic legal notices to intimidate.
"It is unlawful for a collection agency to coerce or intimidate any debtor by delivering or mailing any paper or document simulating, or intending to simulate, a summons, warrant, writ, or court process." - 18 Pa. Cons. Stat. Ann. § 7311
Other unfair tactics include charging unauthorized fees or interest, prematurely cashing postdated checks, or using social media to contact debtors publicly. Collection agencies are also barred from providing legal services, representing creditors in court without an attorney, or soliciting employment for lawyers.
Violations of the FCEUA automatically breach the Unfair Trade Practices and Consumer Protection Law, which carries severe consequences. Offenders may face criminal charges - typically third-degree misdemeanors - and civil penalties of up to $5,000 per violation. Consumers can also sue for actual damages or a statutory minimum, with courts able to award up to three times the actual damages in certain cases. These penalties highlight the serious risks for collectors who ignore the law.
The Pennsylvania Attorney General plays a critical role in enforcing these regulations. The Bureau of Consumer Protection, part of the Attorney General’s office, investigates complaints and has the authority to take legal action against collectors engaging in deceptive or abusive practices.
Consumers can report violations to the Bureau of Consumer Protection by calling 1-800-441-2555 or filing a complaint online at www.attorneygeneral.gov. Detailed records of illegal communications - such as call logs with dates, times, and frequencies - can serve as vital evidence in legal proceedings.
The Attorney General’s office can pursue measures like temporary or permanent injunctions to halt illegal activities. They may also negotiate voluntary compliance agreements that include restitution for affected consumers. Additionally, public advisories are issued to keep residents informed about their rights, particularly regarding changes in electronic communication rules.
Under Pennsylvania law, consumers have two years from the date of a violation to file a lawsuit. Importantly, collectors cannot face double penalties for the same violation under both state and federal law, as the penalties are not cumulative. This enforcement system ensures that debt collectors and buyers prioritize compliance, safeguarding consumers while mitigating risks for businesses involved in debt trading.
In Pennsylvania, every debt portfolio transfer requires a written assignment under 18 Pa. Cons. Stat. Ann. § 7311. Without this document, debt buyers cannot legally collect or take legal action on the accounts they acquire.
It's also essential to confirm that the original creditor-debtor agreements don’t contain anti-assignment clauses. If the contract forbids transfers, the assignment is invalid under Pennsylvania law. Additionally, the documentation must include the original agreements to confirm that any interest, fees, or charges being collected are either explicitly allowed by the contract or permitted under state law.
For bulk sales involving more than 51% of a business's assets, buyers must obtain a bulk sale clearance certificate (Form REV-181) from the Pennsylvania Department of Revenue. This step ensures that buyers don’t inherit the seller’s unpaid tax obligations.
"The purchaser may be liable to seller's creditors, including state taxing authorities, to pay the seller's outstanding debts to the extent of the monetary consideration paid by the purchaser to the seller." - Demetri A. Braynin, Attorney, Starfield & Smith, P.C.
Account histories must also include precise details about the nature, amount, and legal status of each debt, as required by the Fair Credit Extension Uniformity Act. Misrepresenting these details can result in penalties under the Unfair Trade Practices and Consumer Protection Law. Proper documentation not only ensures legal enforceability but also supports the transparency needed for bulk sales.
Transparency is just as important as documentation in bulk debt sales, especially to avoid successor liability. Pennsylvania law explicitly forbids misrepresenting accounts as being sold to "innocent purchasers for value". This means debt buyers cannot imply that consumers lose their rights to dispute or defend against a debt simply because it was sold. Any defenses or rights the consumer had before the sale remain intact afterward.
To protect against unexpected liabilities, buyers should consider placing the purchase price in escrow during bulk sales. This allows time to resolve any claims from the seller’s creditors before releasing funds. Buyers should also notify creditors and state tax authorities in advance, giving them the opportunity to submit claims before the transaction is finalized.
Platforms like Debexpert can help streamline compliance by offering secure file sharing and portfolio analytics. These tools ensure that all parties have access to verified account histories, original agreements, and assignment documentation, which are critical for meeting Pennsylvania's transparency requirements.
Maintaining a clear chain of title for each account in a bulk portfolio is crucial to avoid legal issues. Every transfer needs to be backed by written documentation, and any disputed accounts should be flagged to prevent misleading reporting. Pennsylvania is one of only five states where compliance with bulk sales laws is key to avoiding successor liability. By focusing on thorough documentation and transparent practices, debt buyers can navigate Pennsylvania’s legal landscape with greater confidence.
Pennsylvania offers strong protections against wage garnishment for consumer debts, with earned wages being fully exempt. While federal law permits creditors to garnish up to 25% of disposable income, Pennsylvania limits this practice to just three specific cases: overdue child support, unpaid rent in landlord-tenant disputes, and federal administrative actions like delinquent student loans. Even in these cases, there are strict caps. For instance, garnishment for back rent is limited to 10% of net wages, ensuring that individuals are not pushed below poverty guidelines. In child support situations, garnishments can reach up to 50% of disposable income if the debtor supports another spouse or child, and 60% if they do not. If payments are more than 12 weeks overdue, an additional 5% can be garnished.
"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." - Daniel Cohen
Although wages are protected, creditors can target funds in a debtor's bank account through a bank levy once a court judgment is obtained. Pennsylvania also provides protections for various other forms of income and property, limiting the reach of creditors.
Pennsylvania law goes beyond wage protection, shielding numerous types of income and property from creditor actions. Alongside the full wage exemption, there’s a $300 general exemption that applies to personal property or bank accounts. Additionally, banks are required to inform creditors about recurring electronic deposits, such as Social Security or disability payments, when account balances are below $10,000. Assets held jointly by spouses as tenants by the entirety are also typically protected from being seized for the individual debts of one partner.
Retirement accounts are another area where Pennsylvania offers strong protections. Most public pensions and private retirement funds deposited over a year ago are safeguarded. Other types of income and property - like unemployment benefits, workers' compensation, veterans' benefits, and accident or disability insurance - are entirely exempt, no matter their value. Essential personal items, such as bibles, schoolbooks, sewing machines, necessary clothing, and military uniforms, are also off-limits. Similarly, funds from group life insurance policies, no-fault automobile insurance payments, and benefits from fraternal societies are protected from creditors.
Once these exemptions are understood, creditors must navigate specific legal steps to enforce judgments.
Despite the protections in place, creditors have legal pathways to enforce judgments once they are obtained. The process begins with identifying the debtor's assets, often through tools like background searches or credit reports. Once assets are located, the creditor files a writ of execution with the court records office (Prothonotary). This writ allows the county sheriff to seize assets or freeze accounts.
"The easiest way to collect on a judgment in Pennsylvania is to file a writ of execution with the local sheriff's office." - Jayne Thompson, LL.B., LL.M.
The writ must include a completed Sheriff Instruction Sheet, specifying actions such as seizing vehicles or freezing bank accounts. For bank levies, the sheriff serves interrogatories to the debtor's bank, freezing the account and typically releasing funds (minus the $300 exemption) within 30 days. It’s important to note that all garnishments and levies must be served by the sheriff to be valid.
To enforce a judgment against real property, the creditor must file the judgment in the county where the property is located. This action prevents the debtor from selling or refinancing the property without first resolving the debt. Judgment liens can last up to 20 years but require renewal every five years through the Prothonotary’s Office. Since over 80% of court judgments remain uncollected, acting quickly is essential to avoid losing access to assets or facing additional legal barriers.
Pennsylvania's debt collection laws require strict adherence to both federal and state regulations. The Fair Credit Extension Uniformity Act (FCEUA) offers protections that go beyond the federal Fair Debt Collection Practices Act (FDCPA) by applying restrictions to original creditors as well as third-party collectors. With a four-year statute of limitations on most debts and protections like full wage and $300 property exemptions, collectors must carefully navigate these rules.
Key legal restrictions, such as limits on communication hours and practices, create a tightly regulated environment for debt buyers. Consumers have the right to take legal action for violations under the Unfair Trade Practices and Consumer Protection Law, which may result in up to triple the damages plus attorney fees. Serious infractions, like imitating court documents, can even lead to criminal charges as third-degree misdemeanors.
Before garnishing bank accounts or seizing property, collectors must first obtain a court judgment. Additionally, Pennsylvania caps both legal and judgment interest rates at 6%. With these stringent rules in place, modern technology has become an essential tool for ensuring compliance and managing recovery efforts effectively.
Given the legal landscape, automated systems have become invaluable for simplifying compliance and improving operational efficiency. These tools help debt buyers and collectors stay within Pennsylvania’s strict regulatory framework while reducing the risk of violations.
For example, automated platforms can track the four-year statute of limitations, ensuring that time-barred debts are not pursued. They can also enforce restrictions on communication frequency and timing, helping agents adhere to the once-per-week contact limit.
Platforms like Debexpert enhance transparency in bulk debt sales by verifying and transferring all necessary documentation during transactions. Automated systems can also send required validation notices within five days of initial contact, as mandated by law. Real-time tracking features help prevent excessive communication, ensuring that recovery efforts remain lawful and efficient. By integrating these tools, debt buyers can confidently meet Pennsylvania's legal requirements while streamlining their operations.
Yes, Pennsylvania’s FCEUA covers both original creditors and third-party debt collectors. This law governs debt collection practices across the board within the state, ensuring that all parties adhere to legal guidelines while safeguarding consumers from harassment or unfair treatment.
To determine if your debt exceeds Pennsylvania’s 4-year statute of limitations, check the date of your last payment or any acknowledgment of the debt. If over four years have passed without a payment or acknowledgment, the debt could be considered time-barred. Be cautious, though - making even a partial payment can reset the clock on the statute of limitations. Always confirm if any actions, like payments, occurred within that four-year timeframe.
In Pennsylvania, while wage garnishment is limited, creditors have other legal avenues to recover debts. They can secure a court judgment and enforce it through actions like bank account levies, property liens, or asset seizures. That said, state laws impose restrictions on how much can be levied and safeguard certain types of income and assets from being collected. Generally, wage garnishment is only permitted in specific situations, such as unpaid taxes or court-ordered judgments.
More than a decade of Ivan's career has been dedicated to Finance, Banking and Digital Solutions. From these three areas, the idea of a fintech solution called Debepxert was born. He started his career in Big Four consulting and continued in the industry, working as a CFO for publicly traded and digital companies. Ivan came into the debt industry in 2019, when company Debexpert started its first operations. Over the past few years the company, following his lead, has become a technological leader in the US, opened its offices in 10 countries and achieved a record level of sales - 700 debt portfolios per year.
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