New York Debt Collection Laws

In New York, the federal Fair Debt Collection Practices Act (FDCPA) and state laws regulate debt collection activities. The FDCPA applies to every state, and it protects consumers from unfair and deceptive debt collection practices. On November 8, 2021, Governor Kathy Hochul signed the Consumer Credit Fairness Act (S.153/A.2382) into law to address predatory debt collection practices in New York. Specifically, this New York law regulates debt collection lawsuits.

For instance, New York's Consumer Credit Fairness Act sets a three-year statute of limitations for most debt collection actions (previously, it was six years) and says a payment on a debt doesn't restart or revive the statute of limitations. It also requires a creditor or collector to give detailed information about a debt-related lawsuit and provide information about ways to defend against a debt collection lawsuit.

How Does the Federal Fair Debt Collection Practices Act Protect Debtors?

The federal FDCPA sets limits on what debt collectors can and can't do when attempting to get you to pay a debt. For example, the FDCPA:

• prevents debt collectors from talking to third parties about your debt (subject to some exceptions)
• calling you at work when you tell them not to do so, and
• engaging in other tactics designed to harass, abuse, or mislead you into paying a debt.

In addition, under changes to the FDCPA that go into effect on November 30, 2021, a debt collector must not bring or threaten to bring a legal action against a consumer to collect a time-barred debt. (12 C.F.R. § 1006.26(b)). This change is consistent with case law, which says the threat of a debt collection lawsuit after the statute of limitations has expired violates the FDCPA.

Who Does the FDCPA Apply To?

The FDCPA applies to debt collectors and some debt buyers. But it usually doesn't cover collection activities that an original creditor performs. But when collecting its own debts, a creditor must comply with the FDCPA if it uses a different name that implies a third party is attempting to collect the debt.

New York's Consumer Credit Fairness Act

New York's Consumer Credit Fairness Act protects consumers facing debt collection lawsuits.

Additional Notice About a Collections Lawsuit Required

The Consumer Credit Fairness Act requires that in pending lawsuits based on a "consumer credit transaction," like a lawsuit to collect on overdue credit card debt, a creditor has to provide an extra notice in addition to serving the summons and complaint to the debtor. The notice must detail, among other things:

• the consequences of not responding to the pending lawsuit, and
• resources that are available to help you defend against the action, such as seeking assistance from a private attorney, a legal aid office, or a free legal assistance computer program that you can use online to help you represent yourself in the lawsuit. (N.Y. C.P.L.R., § 306-d).

The law also prevents creditors from getting a default judgment (an automatic win) if the notice is undeliverable. The Consumer Credit Fairness Act further provides that even if you receive the notice, if service of the lawsuit is improper, you have a defense to the suit. (N.Y. C.P.L.R., § 306-d).

The plaintiff (the party that filed the suit) has to provide a similar notice if it files a motion for summary judgment. (N.Y. C.P.L.R., Rule 3212).

A Collections Lawsuit Must Include a Copy of the Underlying Contract or Agreement

Under this law, a complaint based on a consumer credit transaction must include a copy of the underlying contract or loan agreement or the charge off statement if a cause of action is based on a defaulted credit card. The complaint also must provide, among other things, the date and amount of the last payment, the name of the original creditor, the last four digits of the account number, and an itemization of the amount claimed to be due broken down into principal, finance charges, fees, and costs. (N.Y. C.P.L.R., Rule 3016).

To get a default judgment, if the plaintiff isn't the original creditor, the lawsuit also has to include:

• an affidavit by the original creditor setting forth facts about the underlying debt, the default, the amount due, the sale or assignment of the debt, and the amount due at the time of sale or assignment
• for each subsequent assignment or sale of the debt to another entity, an affidavit of sale of the debt by the debt seller, completed by the seller or assignor, and
• an affidavit of a witness of the plaintiff, which includes a chain of title of the debt, completed by the plaintiff or plaintiff's witness. (Y. C.P.L.R., § 3215).

Three-Year Statute of Limitations for Debt Collection Lawsuits

Under the Consumer Credit Fairness Act, most court actions concerning a consumer credit transaction have to be started within three years (typically, this means three years from when the debtor defaults on the obligation). (N.Y. C.P.L.R., § 214-i). Before the effective date of this law (see below), the statute of limitations was six years.

Also, when the applicable statute of limitations expires, any subsequent payment toward, written or oral affirmation of, or other activity on the debt doesn't revive or extend the limitations period. (N.Y. C.P.L.R., § 214-i). (In some states, a debtor can revive an expired statute of limitations by making a partial payment on a debt or otherwise acknowledging owing an unpaid debt.)

And if the plaintiff requests a default judgment, the request must be accompanied by an affidavit stating a reasonable belief that the statute of limitations hasn't expired. (N.Y. C.P.L.R., § 3215).

Effective Date of the New York Consumer Credit Fairness Act

With the exception of the statute of limitations provisions, which go into effect April 7, 2022, the rest of the Consumer Credit Fairness Act's provisions are effective 180 days after enactment (November 8, 2021), on May 7, 2022.

What to Do If a Creditor or Collector Violates Debt Collection Laws

If a creditor or collector violates the law, you can take one or more of the following actions.

Contact the New York Bureau of Consumer Frauds & Protection

You can file a complaint with the New York Bureau of Consumer Frauds & Protection. This office, part of the Economic Justice Division, prosecutes businesses and individuals engaged in fraudulent, misleading, deceptive, or illegal trade practices.

File a Complaint With the Consumer Financial Protection Bureau

You can also file a complaint with the Consumer Financial Protection Bureau (CFPB) if you have an issue with a creditor or collector. After you submit a complaint, the CFPB will work to get you a response, typically within 15 days.

Talk to a Lawyer

New York also has other laws governing debt collection practices in the state. If a creditor or collector violates federal or state debt collection laws, you might be able to file and win a lawsuit. If you prevail, you can probably get damages and attorneys' fees. To get help initiating a lawsuit and to learn more about your options, talk to a debt relief lawyer.