Pennsylvania affords less protection against creditors than some other states when it comes to a homestead. f your house is paid off, this means that the debt collector could force the sale of your house to get their money. If you have a mortgage against your house, the creditor will not try to sell your house, but you will have to pay off the debt when you sell the house someday. That may not seem like a big deal, but you have to remember that even a small debt can grow to be very large if it accrues interest at a high rate over the course of years. If you sell your house, thinking that you will make money and a debt collector has a lien against the house, you could get a nasty surprise as to the amount owed.
Creditors, including credit card companies also have other options they can pursue. Without notice, a creditor that has won a lawsuit against you can freeze the money in your bank account. You will only be able to access $300 from your account. The rest will go to the creditor to repay the debt. Not only will the creditor get to keep the money that is in the account at the time the account is frozen, the creditor will continue to keep any money that comes into the account until the debt is paid off! This is especially a problem for people that have their paychecks direct deposited into their bank account.
They can also get a judgment if they sue you and sell your property. A creditor can send the sheriff to your house, the sheriff will take an inventory of all of your personal property (furniture, appliances, electronics, vehicles, jewelry, etc.) and the sheriff will set a date to sell your personal property. The money from the sale will go to repay your debt. Pennsylvania state law only allows you to save your clothing, family bible, military uniform, school books and sewing machine from being sold.
In my experience, it's rare that credit card companies will look to put a lien on the house (my professional experience has been they would rather try to go after a bank account or garnish wages) but it is possible.
While the Pennsylvania state laws may not provide much protection from debt collectors, the Federal bankruptcy laws do. Filing for bankruptcy immediately stops all collection actions against you. Your creditors cannot call you, send you letters, start lawsuits, continue lawsuits, freeze your bank accounts or take your property. It is possible for a bankruptcy to release the money in your bank account and remove a lien from your house.
Right now, it sounds like you have a handle on your debt with this payment plan, but if you're struggling, you may want to discuss your options with a local bankruptcy lawyer. Many offer free or low cost consultations (and of course, there's no obligation). Bankruptcy is a major step of course and shouldn't just be filed without speaking to a professional.
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