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 protects consumers from unfair and deceptive debt collection practices. On November 8, 2021, New York Governor Kathy Hochul signed the Consumer Credit Fairness Act (S.153/A.2382) into state law. This law addresses predatory debt collection practices in New York. Specifically, it regulates debt collection lawsuits.
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.
While New York's Consumer Credit Fairness Act protects consumers facing debt collection lawsuits, the federal FDCPA provides consumers with other protections for debt collection. It sets limits on what debt collectors can and can't do when attempting to get you to pay a debt. For example, the FDCPA:
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.
New York's Consumer Credit Fairness Act protects consumers facing debt collection lawsuits.
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 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).
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. (N.Y. C.P.L.R., Rule 3016).
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:
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).
If a creditor or collector violates the law, you can take one or more of the following actions.
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.
New York also has other laws governing debt collection practices in the state. If a creditor or collector violates 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.
Also, you can sue a collector for violating the federal FDCPA. You might be able to recover monetary damages, attorneys' fees, and more. (15 U.S. Code § 1692k).
To get help initiating a lawsuit and to learn more about your options, talk to a debt relief lawyer.
You can file a complaint with the federal Consumer Financial Protection Bureau (CFPB). After you submit a complaint, the CFPB will work to get you a response from the collector, typically within 15 days.
Even though you're being sued, you can still try to settle the debt. If the collector violated federal or state laws when trying to collect from you, you could have leverage in debt settlement negotiations.
Learn what to do if a bill collector uses abusive tactics.
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Get tips on how to tell the difference between a debt collector and a scammer.
If you need help dealing with an aggressive debt collector, figuring out what option is best for handling your debts, negotiating a settlement, or responding to a lawsuit for nonpayment of a debt, consider consulting with a debt relief lawyer.
If you have a lot of debts, you might want to consider filing for bankruptcy. In that situation, you'll want to talk to a bankruptcy lawyer.