Time Frame in Which a Debt Is Uncollectible in Pennsylvania
Pennsylvania statutes of limitation on pre-judgment debt vary significantly from the time frame the debt is collectible with a judgment. Once a debt is incurred, the debtor is ethically liable until the debt is paid or forgiven. After a certain period of time, debts may be considered uncollectible due to the fact that the creditor cannot win a judgment lawsuit against the debtor.
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Statute of Limitations
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Pennsylvania state statute of limitations for open account credit, written credit accounts, oral credit accounts is four years. The limitations clock begins on the date of last activity on the credit account. Creditors and collection agencies may continue to attempt debt collection after the statute of limitations is over as the debt does not disappear. If the collectors or creditors sue for a money judgment, the debtor can defend the suit based on the fact that the debt is out-of-statute.
Civil Money Judgments
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If the creditor sues for a money judgment during the time in which the debt is still collectible and wins, the window of opportunity for collection expands to 20 years. Creditors with civil money judgments may legally place a lien against real property that the debtor owns in Pennsylvania. Liens are valid for five years. In addition to liens, judgment debts are collectible through bank account garnishments and non-exempt personal property seizures. Except for child support debt and tax liabilities, wages are exempt from garnishment in Pennsylvania. Judgments earn 6 percent interest in Pennsylvania.
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Deficiency Judgments
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Pennsylvania gives lenders the right to sue foreclosed homeowners for any balance due on the mortgage after a foreclosure sale. Lenders have six months after the date of the sale to sue the borrower for a deficiency judgment. After that time, unpaid mortgage debt is uncollectible. If the court grants a deficiency judgment, it is collectible for 20 years and earns 6 percent interest per year.
Credit Rating
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Debts outside of a judgment may be legally uncollectible after four years in Pennsylvania, but the creditors and debt collectors can report the debt to consumer reporting agencies for seven years. Whether the unpaid debt becomes a charge-off by the original creditor or a collection account for a collection agency, the debt will negatively affect the consumer’s credit rating for the length of time it is reported. A judgment is allowed to remain on a consumer credit report for the time frame during which it is valid. In Pennsylvania, judgments impact credit ratings for 20 years.
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