Legal Media Analysts

Friday, October 29, 2021

Predatory Debt Collection Practices No Longer Tolerated in New York

A proposed bill (A2382), awaiting Gov. Hochul's signature, seeks to amend the civil practice rules in NY (CPLR) & Judiciary Law concerning predatory debt collection practices & consumer credit actions. 

Specifically, the Bill provides the following: 

  • Cut the statute of limitations on consumer credit transactions in half (i.e., from 6 years to 3 years);
  • Require all consumer credit action pleadings to include additional information (i.e., name of original creditor, last 4 digits of account number on most statement, date & amount of last payment, etc.);
  • Allow defendants to raise improper service as a defense (i.e., unwaivable); 
  • Require an additional notice of a pending consumer credit action be mailed to a defendant by clerk of the court; &
  • Require additional steps for entry of default judgment against a debtor (i.e., affidavit by original creditor of facts related to debt/default in payment, affidavit of sale for every subsequent assignment of sale of debt to a third-party, affidavit of a witness of the plaintiff, including chain of title of debt, etc.). 

As you may know, thousands upon thousands of debt collection lawsuits are filed against low to moderate income families in New York. Plus, debt collectors often utilize unlawful debt collection practices, including continuous & persistent phone calls in the early morning or late evening hours. Additionally, debt collectors have been able to take advantage of the 6-year statute of limitations by tacking on additional fees & interest on underlying debt. 

The Bill, when signed, will undoubtedly reduce the number of debt collection lawsuits in New York, force debt collectors to act swiftly should they choose to collect on an unpaid debt, significantly reduce fees & interest on underlying debts, & make entry of a default judgment against a debtor much more difficult to obtain. 

The COVID-19 pandemic is still ongoing & those in credit card debt are likely the same ones who have been laid off & have difficulty paying their bills & putting food on their tables. This Bill will certainly help those individuals who have & continue to face predatory debt collection practices from debtors & would provide some sort of relief during this difficult time. 

Stay tuned to see if Gov. Hochul signs this bill into legislation...