PA Debt Collection
How To Collect Debt In Pennsylvania
Debt collection is defined as the attempt to collect money owed from another party. Each state has different laws regarding the enforcement and collections of debts owed.
Our Pittsburgh law firm handles all types of debt collection cases throughout the entire state of Pennsylvania including:
- personal debt & money owed,
- small business debt / large corporate debt,
- credit card debt / student loan debt,
- hospital / medical debt,
- creditor’s rights,
- debtor’s rights, and
- foreign judgments.
The 5 Steps of Debt Collection
Pennsylvania debt collection typically involves 5 steps.
- Investigate the debtor
- The demand letter
- Getting the judgment
- Collecting the judgment
- Reviving/satisfying the judgment
Step 1: Investigate The Debtor
The first step in any debt collection case should be to thoroughly examine the debtor and their assets. It is important to do pre-lawsuit investigations on websites such as Pennsylvania Corporate Name Search; Facebook and/or Linkedin.
You should also do a property record search on any county property assessments sites if possible, to see if the debtor owns any real property. For example, in Allegheny County, you can actually pay to search by owners last name.
In addition, a thorough search of all past and present lawsuits against the debtor should researched. If the debtor has a number of open lawsuits, then it makes little sense to waste time sending a demand letter. On the other hand, if the debtor has no lawsuits, or satisfies any pending lawsuits quickly, then a demand letter may avoid the cost and delays of litigation.
This research should always be done without alerting the debtor, if possible. This research not only aids in litigation if necessary, but can also become important later if the defendant refuses to voluntarily pay a judgment. It is best to have this investigation prior to contacting the debtor to avoid any attempts by the debtor to hide assets during litigation.
Step 2. The Demand Letter
In appropriate cases, the next step is the demand letter. The demand letter can be the easiest and potentially the fastest way to get paid. A demand letter is typically sent by an attorney certified mail demanding payment of the debt.
There are federal and state requirements when demand letters are written from debt collectors, which mandate that the demand letter inform the debtor of the following:.
- the name of the creditor;
- the amount of the debt;
- the opportunity to dispute the debt, and/or
- the opportunity to request written verification of the debt.
Demand letters are NOT a prerequisite to filing lawsuits in Pennsylvania. However, a well-drafted demand letter is a viable option for collecting pre-suit. Payment plans prior to filing suit can also help pay for the cost of the lawsuit if necessary.
Depending upon the circumstances, we typically set a 15 day notice to pay. If the demand letter does not produce payment, then legal action is usually necessary to collect the debt.
Step 3. Filing Suit To Get The Judgment
The purpose of a debt collection lawsuit is to get the ‘judgment’. A judgment is an official decree that a specific debtor(s) owes another party money. The judgment is filed as a public record and released to credit reporting agencies. The judgment also immediately acts as a lien against any real property owned by the debtor.
The process involves filing a complaint in civil action. If the defendant fails to respond in 30 days, a default judgment can be entered. If the defendant denies owing the money, then a hearing is held and an award is issued on favor of the prevailing party.
The defendant does not legally owe the money until proven in court and a judgment is entered.
Depending upon where the lawsuit is filed (i.e. magistrate, county arbitration, county general docket), there can be multiple appeals available for the defendant to delay payment. For this reason, there is strategy involved in deciding in what jurisdiction a debt collection lawsuit should be filed.
If a debtor still does not pay after a judgment is obtained, then the creditor must take appropriate legal action to enforce the judgment.
Step 4. Getting Paid After The Judgment
Once a creditor has a judgment, the next step is to collect the judgment.
Unless a debtor voluntarily pays, enforce of the judgment is necessary. In Pennsylvania, creditors can authorize the sheriff’s office to perform certain execution attempts on the debtors assets. These include:
- scheduling a sheriff sale of personal property of the debtor,
- scheduling a sheriff sale real property owned by the debtor,
- Selling vehicles, boats, motorcycles, ATV’s and other assets of the debtor, and/or
- seizing and garnishing bank accounts owned by the debtor.
Before any decisions are made on spending additional monies in executing, creditors may also take depositions and conduct written discovery concerning the debtors assets.
read more: Enforcing Pennsylvania Judgments
Step 5: Reviving/Satisfying The Judgment
Once a judgment has been obtained, creditors are not obligated to satisfy the judgment until the full judgment, all applicable interest, and any and all court costs have been paid in full. Interest accrues on Pennsylvania judgments at 6% per annum from the date the judgment was originally filed.
If a debtor refuses to pay a judgment, and execution attempts have failed, creditors should be certain to revive the judgment every 5 years. If a judgment is not revived in 5 years, creditors may lose important rights in future attempts to collect the money owed. Judgments may be revived up to 20 years in Pennsylvania.
Free Consultations – 412.802.6666
We offer free consultations at all levels throughout the litigation process, and we are often eager to assist in enforcing judgments which have already been entered. For more information, please call attorneys Noah Paul Fardo or Shawn Flaherty at 412.802.6666.
Read more: PA Debt Collection FAQ’s