Pennsylvania Debt Relief: The Tools You Need to Escape the Debt Trap

Pennsylvania Debt Relief

You may be one of the many Pennsylvanians who qualify for debt relief. Find out today!

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Home to 12,972,008 people, Pennsylvania has a slightly lower cost of living than the rest of the country. However, the state isn’t without its flaws, especially when it comes to economic resources and debt.

According to one study, 12% of Pennsylvania residents live in poverty, making it the 29th most impoverished state. The total debt per capita is $45,580, not much lower than the average personal income of $55,490. In comparison, the national real median household income is $70,784.

If you’re a Pennsylvanian who needs debt relief, or if you’re interested in learning more about debt collection in your state, here’s what you should know.

Are you eligible for debt relief?

If you’re a Pennsylvania resident, DebtHammer may be able to help.

Pennsylvania debt statistics

Here are the most up-to-date Pennsylvania debt statistics that many residents are facing:

  • Average household debt/Total debt per capita: $45,580
  • Average student loan debt: $35,385
  • Average credit score: 723
  • Median mortgage payment: $1,474
  • Bankruptcies in 2022: 2,328
  • Personal income/Annual mean wage: $55,490
  • Child poverty: 16.6%
  • Unemployment: 4.0%

Debt relief options for Pennsylvania residents

Pennsylvania debt relief exists in many forms, including:

  • Debt settlement: Debt settlement involves negotiating with your creditors to reduce how much you owe on a certain account, such as a credit card or loan. Most people use a professional debt settlement agency for this.

READ MORE: Best debt settlement companies in your area

  • Debt consolidation loans: A debt consolidation loan is a loan that combines several unsecured debts into one. These loans usually have a lower interest rate than the individual debts, making them a good way of saving money on interest payments.
  • Debt management plans (DMPs): Offered through nonprofit credit counseling agencies, DMPs are three- to five-year plans that help you manage and repay your debts. With one, an agency could help you lower interest rates, set up a more affordable monthly payment plan, or waive late charges.
  • DIY debt settlement/DIY plans: With DIY debt settlement, you could lower how much you owe or negotiate better repayment terms or lower interest rates.
  • Personal bankruptcy: When it comes to personal bankruptcy, most people file either a Chapter 7 or Chapter 13. Not everyone is eligible for both options, and bankruptcy may not be right for you. Consult an attorney about whether you should file and the benefits — and repercussions — of doing so.

Debt settlement in Pennsylvania

A debt settlement plan could help if you’ve fallen behind on bills, can’t make multiple monthly debt payments, or are using loans or credit cards for daily expenses. With debt settlement, you could potentially reduce how much you owe on eligible debts by 50% or more.

Debt settlement can take three or four years to complete, on average. During the process, an agency (if you go through one) will try to get your creditors to reduce how much you owe.

In the meantime, you’ll need to set aside a set amount each month into a secure account. Once you’ve saved up enough money, the agency will pay your creditors in a lump sum equal to the new agreed-upon amount.

With debt settlement, you may be asked to stop making payments on your enrolled debts to help make the process successful. This could lead to late fees or hurt your credit. You may also have to quit using any enrolled credit cards, (aside from one for emergencies).

Most forms of unsecured consumer debts are eligible for debt settlement, including:

  • Personal loans
  • Lines of credit
  • Department store cards
  • Old judgments
  • Student loans in default

READ MORE: How does debt settlement work?

Pennsylvania debt relief companies

These Pennsylvania debt relief companies could help if you’re struggling with large amounts of expensive debt:

Pennsylvania debt settlement attorneys

If you need a debt settlement or bankruptcy attorney in Pennsylvania, here are some top-rated options:

READ MORE: Debt settlement attorneys: Do you need one?

Debt resources for Pennsylvania residents facing hardship

For Pennsylvania residents seeking debt relief or other forms of financial assistance, there are many federal and state programs available. These can help with things like rent or mortgage payments, utility bills, healthcare, childcare, and vocational training.

In Pennsylvania, approximately 1.13 million residents are food insecure, including 347,720 children. This is a 37% to 38% decrease from 2015.

However, many residents still need help finding nutritious, affordable food. Fortunately, Pennsylvania has a dedicated directory of food banks and pantries throughout the state that can help:

Debt collection laws in Pennsylvania

Pennsylvania enforces the federal Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Extension Uniformity Act. Together, these Acts protect borrowers by preventing debt collectors from engaging in certain tactics to try to collect money. For example, these Acts:

  • Protect consumers by regulating when, where, and how debt collectors contact them (and the information they can request)
  • Prevent debt collectors from harassing the borrower or using threats of violence or profane language when communicating with them
  • Prohibit debt collectors from using unfair or unconscionable practices
  • Prevent debt collectors from falsifying information or claiming to be someone they’re not

For more information about your rights as a consumer in Pennsylvania, the Pennsylvania Attorney General has an array of free resources and materials.

Income and employment in Pennsylvania

In April 2020, Pennsylvania’s unemployment rate was 16.5%. Now, it’s 4% — still slightly higher than the national average of 3.5% but a major improvement.

Pennsylvania ranks 21st in job creation with 193,500 new jobs created in the state.

The state is not a right-to-work state. This means employers can require employees to join a union and pay union fees as a condition of employment.

The state is an employment-at-will state, however. This means an employer can terminate an employee for any reason unless that reason is discriminatory or illegal.

How to apply for unemployment benefits in Pennsylvania

The first step to applying for unemployment benefits in Pennsylvania is to go to the Office of Unemployment Compensation website. This website provides information regarding eligibility for benefits. It also offers resources for people filing for unemployment for the first time.

Once on the page, click “File an Initial Claim.” Doing this will give you additional information regarding benefits, such as how to file for weekly certification.

When applying, you’ll need the following information:

  • Home and mailing address (if different)
  • Phone number and email
  • Banking information for direct deposit
  • SSN
  • Your UC System username and password
  • Employer’s contact information and their PA UC account number
  • First and last day of your recent job(s)
  • Reason for leaving

Once you have this information, click Apply for UC. This will take you to the UC System where you can either register for an account or sign in.

After signing in, you can file or reopen a claim. You can also check a past claim’s status and see your benefit payments. You can also use the account to file for weekly benefits.

Banking and taxes in Pennsylvania

Pennsylvania has a 3.07% personal income tax for residents and non-residents. Estates, trusts, partnerships, business trusts, limited liability companies, and S corporations all have the same tax rate.

Certain forms of income are exempt from taxation. This includes compensation for certain health-related programs and capital gains from selling a principal residence. The Tax Compendium of April 2021 has more information regarding income tax in the state.

In terms of banking, 2.6% of Pennsylvania households were unbanked in 2021. This means they don’t have a checking or savings account. Oftentimes, people who are unbanked end up using expensive forms of credit like payday loans or credit cards and get caught in a debt trap.

Pennsylvania housing market

Currently, the average home value in Pennsylvania is $271,115, a 9.5% increase from last year. This is still lower than the national average, which is $357,544. Around 69.2% of residents are homeowners.

The Pennsylvania Homeowners Assistance Fund provides housing assistance for residents who meet specific criteria. To qualify, you must:

  • Be a current homeowner in Pennsylvania
  • Use the property as your primary residence
  • Have experienced financial hardship due to COVID-19 that now causes you to seek assistance with housing-related expenses or late mortgage payments
  • Be at least 30 days past due on your mortgage payments (in most cases)
  • Make no more than 150% of the area’s median income
  • Not be receiving any other mortgage payment assistance, including utility payments, from a state, local, nonprofit, tribal, or federal source

You can find more eligibility requirements or apply for benefits on the PAHAF website.

Pennsylvania’s median mortgage payment is $1,477. The average rent payment depends on things like the neighborhood and apartment size. In general, it ranges from about $501 to $1,000, though some apartments may be upwards of $2,000.

Retirement in Pennsylvania

On average, Pennsylvania residents have $462,075 saved for retirement. To live comfortably in retirement with a similar lifestyle, the average resident should have $1,019,615.

Average Pennsylvania insurance premiums

A standard car insurance premium in Pennsylvania (with full coverage) is about $2,002 a year, or $167 a month. The average homeowners’ insurance policy for a $250,000 property is about $786 a year, or $65.50 a month.

Payday lending status in Pennsylvania: Prohibited

Payday lending is illegal in many states, including Pennsylvania.

  • Maximum loan amount: N/A
  • Maximum Interest Rate (APR): N/A
  • Minimum loan term: N/A
  • Maximum loan term: N/A

Statute of limitations on debt in Pennsylvania

The statute of limitations is the time in which a creditor or debt collection agency can file a lawsuit on an unpaid debt. It’s four years on most consumer debts in Pennsylvania, though there’s no limit on state tax debt.

  • Medical debt: 4 years
  • Credit card: 4 years
  • Auto loan debt: 4 years
  • State tax debt: No limit

State hardship programs

Pennsylvania offers many state-specific hardship programs. Some of these are funded at the local or state level, while others are federally-funded. They include:

Help for Veterans

As of 2020, Pennsylvania was home to 769,423 veterans. The Pennsylvania Department of Veteran Affairs offers resources to support veterans who are facing unemployment, homelessness, or other financial hardships.

Facilities in Pennsylvania

Pennsylvania has many VA facilities. Some are full-service, while others focus on specific needs, such as healthcare. Here are some of the biggest ones:

Employment resources for veterans

Check out these employment resources and organizations for veterans and their families:

  • CareerOneStop: This is an all-in-one website that offers job advice, career resources, and a job search portal.
  • VeteranRecruiting.com: This site has online career fairs for veterans and military spouses.
  • Helmets to Hardhats: A nonprofit program, this resource can help veterans and other military personnel prepare for a civilian career in construction.
  • Hiring Our Heroes: HOH works with veterans, military personnel, and eligible spouses through networking and hiring events, vocational training, and fellowship programs.
  • My Next Move: This group helps veterans find a civilian job that employs their military skills.
  • Warriors to Work: This program matches veterans with potential employers, as well as helps with some vocational training and resume updating.

The bottom line

Debt relief in Pennsylvania ranges from debt settlement to debt consolidation to bankruptcy. If you need help managing your debts, consider your options carefully to see what works best for you. And if you’re seeking financial assistance for things like healthcare, food, or bill pay, the state has many federally- and state-funded programs to help.

FAQs

How long can a debt be collected in Pennsylvania?

Most consumer debts can be collected in court for four years, with the exception of state tax debt, which has no limit. Even after four years, a debt collector can still contact you to try to collect what’s owed.

When does the statute of limitations begin in Pennsylvania?

The statute of limitations on debt in Pennsylvania starts the moment you miss a payment.

Am I responsible for my spouse’s debt if I get divorced in Pennsylvania?

If you or your spouse incurs a debt during the marriage, it usually becomes both of your responsibility. Even upon divorce, both parties may be responsible for repaying any joint debts, including credit cards, loans, and tax-related debts.

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