Legal Question in Credit and Debt Law in Pennsylvania

I have a unsecured loan that I am having trouble paying. Can they garnish my wages or take my house.

Asked on 12/05/12, 5:56 pm

1 Answer from Attorneys

PA has no wage garnishment in general for unsecured debt. They do have limited garnishment for things like child support or some other kinds of debts (taxes, back rent) but not for loans.

Can the lender take your house? It depends. The lender can do nothing until the lender first gets a judgment against you. Once the judgment is entered, there is no PA homestead exemption under state law. However, the ability to seize any land will depend on how it is titled and whether it is mortgaged and how much equity you have in the land. If the debt is only owed by you but the real property is owned as a tenancy by the entirety by you and your spouse, then the home cannot be seized and sold. If you did the sell the land in the future, any judgment is a lien on the home. Because a sale of the home would destroy any tenancy by the entirety relationship with your spouse, any judgment lien would attach to your share of the equity at the time of the sale.

If the home is just in your name, is it mortgaged and what is the property worth? While there is no homestead exemption, if you filed bankruptcy, the land may be protected under the federal bankruptcy exemptions which do provide a homestead allowance. If you have at least $10,000 in dischargeable debt, you may want to see if you qualify for a chapter 7 and see if you can get this and your other debts wiped out this way.

If there is little equity in the property and its mortgaged, then the lender is not going to take your home. Again, any judgment would just be a lien on the property. Judgment liens on real estate can be revived after 5 years. Revival is just so that the judgment liens can continue to be enforced.

If you cannot file bankruptcy for any reason, then you need still need to think about resolving the debt in some way even if you cannot pay now. If you default, the most likely scenario is that the lender may send your debt out for collection or may sell the debt to a junk debt buyer. Or they may sue and get a judgment against you in a few months. If you get sued, judgments never go away. They can be enforced against personal property (bank accounts and vehicles (cars, planes, boats) for 20 years; and judgments against land can be renewed after 5 years. What are your circumstances? Why are you having trouble paying? Do you need some breathing room or are your circumstances going to be more permanent?

If you are interested in discussing your situation in confidence, please contact me at [email protected]

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Answered on 12/05/12, 10:23 pm

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