Each state has different laws regarding the collection and enforcement of debts. There are four main steps to debt collection in Pennsylvania: investigating the debtor, sending the debtor a demand letter, filing suit against the debtor and collecting or reviving the judgment against the debtor.
Before attempting to collect, the creditor should make sure that their claim is within the statute of limitations. Also, the debtor’s location, assets and resources should be investigated so that creditors may make an informed evaluation of prospects for recovery. To that end, it is important to determine whether the debtor owns any real property, whether the debtor is employed and whether the debtor has any other open lawsuits. Creditors may utilize all publicly available resources such as Pennsylvania Corporate Name Search, Facebook and LinkedIn to research the debtor prior to filing suit.
It is prudent to prepare for any defenses that the debtor may raise, and any attempts made by the debtor to hide assets during litigation. Preliminary research done without alerting the debtor to the possibility of a lawsuit may yield valuable information that can be used if the debtor later claims to be unable to pay, or refuses to pay, a judgment.
A demand letter may prompt a debtor to pay off the debt, thereby avoiding lengthy litigation. The demand letter is typically drafted by an attorney and sent by certified mail. Demand letters must include the name of the creditor, the name of the debtor, the circumstances surrounding the debt that is owed, and a notice to the debtor that he or she may dispute the debt in writing.
Generally, debtors have 30 days to dispute the debt according to the Fair Debt Collection Practices Act. However, once evidence of the debt is presented, creditors may not be required to wait the full 30 days and will usually afford debtors ten to 15 days to respond before filing suit.
If the debtor does not respond to the demand letter, a civil complaint may be filed. Creditors may obtain a judgment against debtors in several ways. If a debtor fails to respond within 30 days of service, a default judgment in the creditor’s favor may be entered. A motion for summary judgment may be filed if the debtor responds within 30 days but provides inadequate responses to the complaint. Finally, arbitration or a trial may result in a judgment being entered against the debtor.
Once a judgment against a debtor has been entered, they must satisfy the debt. However, debtors may not pay the debt voluntarily. Pennsylvania creditors may collect the judgment by garnishing bank accounts owned by the debtor, forced sale of real or personal property owned by the debtor, forced sale of vehicles or boats or other motor vehicles owned by the debtor. Judgments against debtors in Pennsylvania acts as a lien against debtor’s real property, therefore debtors must satisfy that lien before transferring property. Attempts to garnish bank accounts must be done promptly as debtors who are aware of this collection method may withdraw their funds.
Debtors may be subpoenaed by creditors who wish to inquire about the debtor’s property or assets. Subpoenaed debtors who fail to appear for deposition may be held in contempt of court. Continued failure to appear may result in the issuance of a bench warrant for the debtor’s arrest. If a debtor refuses to pay a judgment and all collection efforts were made to no avail, creditors may revive the judgment every five years for up to 20 years.