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A Guide to New York’s New Debt Collection Laws

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In a Nutshell

New York state's Consumer Credit Fairness Act (CCFA), reduced the statute of limitations for consumer debts from six years to three years. It also added notification requirements for creditors and debt collectors that sue borrowers. Under the CCFA, the statute of limitations can’t be restarted if a borrower makes a payment or acknowledges a debt. Finally, under the CCFA, debt collectors must be able to prove they own the debt when they sue to collect on it.

Written by Lawyer John CobleLegally reviewed by Attorney Paige Hooper
Updated August 28, 2023


What Laws Protect New Yorkers From Debt Collectors?

There are both federal and state laws that protect New York consumers from unfair, abusive, and deceptive practices by debt collectors. 

The federal Fair Debt Collection Practices Act (FDCPA) is the primary federal law governing debt collectors. It limits when and how debt collectors can contact you. The FDCPA generally only applies to third-party debt collectors, not the original creditor. 

In addition to the FDCPA, New Yorkers are also protected by the state’s Consumer Credit Fairness Act (CCFA), which took effect in April 2022. As its name implies, the CCFA only applies to consumer debt, such as credit card debt, medical debt, and personal loans. It doesn’t apply to other types of debt like business debt. Most of the CCFA’s requirements apply to both original creditors and third-party debt collectors.

Also, some cities, like New York City and Buffalo, have their own debt collection regulations as an extra layer of protection for residents. Whenever a debt collector or debt collection agency communicates with a resident in that city, it must comply with city, state, and federal laws.

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How Does the CCFA Protect New Yorkers?

The Consumer Credit Fairness Act made several important changes to how debt collection works in the state of New York. Here are three of the most notable changes:

  • It shortened the statute of limitations from six years to three years for consumer debts.

  • It strengthened the notice requirements by having the court send notices of debt collection lawsuits.

  • It required debt collectors to prove they have a legal right to collect a debt.

The Statute of Limitations Under the CCFA: Two Important Changes

The statute of limitations establishes a time limit for a creditor to sue you to collect on a debt. After this time has passed, the debt is considered to be time-barred. If a creditor or debt collector sues you for a time-barred debt, you can use the statute of limitations as a defense. If the statute of limitations has expired, the judge will usually dismiss the debt collection lawsuit, but only if you respond to the lawsuit and raise the defense.

The CCFA reduced the statute of limitations for consumer credit transactions in New York state from six years to three years. three years. It also addressed the long-standing issue of original creditors and debt collectors tricking borrowers into restarting the statute of limitations. Before the CCFA, if you made a payment on the time-barred account or even acknowledged you owed the money, the statute of limitations would start over. Under the CCFA, once the statute of limitations on a debt has expired, it can’t be restarted by the debtor making a payment or acknowledging the debt.

What Are the Lawsuit Notice Requirements Under the CCFA?

If you get sued by a debt collector but you aren’t notified about the lawsuit, how can you defend yourself? Many debt collectors have sued borrowers and gotten default judgments without giving proper notice of the lawsuit. Simply put, a default judgment means you lose because you didn’t show up. These judgments can lead to wage garnishment and serious collections measures. The CCFA includes a new notice requirement for both original creditors and debt collectors that’s intended to prevent this.

Under the new provision, the plaintiff (the person or company that files a lawsuit) must still notify the defendant (the person being sued) about the lawsuit in accordance with the state’s laws.The plaintiff must then file an additional notice with the court. The court clerk sends this notice to the defendant. Since this notice comes directly from the court, it provides an additional layer of protection against a defendant losing a case simply because they didn’t know about it.

The CCFA notice required under New York law must:

  • Be in both English and Spanish

  • Include the name of the original creditor (if the plaintiff is a third-party debt collector)

  • Include a statement notifying you that you should file an answer as soon as possible

  • Provide the web address for New York Law Help or NYCourts.gov

  • Include a statement explaining the consequences of not responding to the lawsuit

If this letter is returned as undeliverable, the court can’t issue a default judgment for the defendant’s failure to answer the lawsuit. These notice requirements will help ensure that defendants in consumer debt collection actions have every opportunity to defend their cases and that they know their options for legal advice and assistance.

What Are the Documentation Requirements for Lawsuits Under the CCFA?

In the past, third-party debt collectors have won lawsuits — often through default judgments — even though they had no proof they owned the debt and could legally collect on it. A final important change under the CCFA requires debt collectors and debt buyers to prove they can legally collect on a debt. They must do this by including certain information in the complaint, which is the initial document in a lawsuit that explains why the plaintiff is suing the defendant. 

Under the CCFA, the plaintiff must provide the original contract or a charge-off statement for revolving accounts like credit cards. They must also include certain information about the debt in the complaint, including:

  • The name of the original creditor, unless the plaintiff is the original creditor

  • The last four digits of the account number printed on the most recent monthly statement that shows a purchase, payment, or balance transfer

  • The date and amount of the last payment. If no payment was ever received, they must say so.

  • An itemization of the amount owed, showing the principal, finance charges, fees, collection costs, attorney’s fees, interest, and any other charges

If the plaintiff is a third-party debt collector, the complaint must ALSO include all of the following:

  • The date on which the debt was sold or assigned to the plaintiff

  • The names and dates of transfer for each debt collector that has owned the debt (called the chain of custody) between the original creditor and the plaintiff bringing this lawsuit

  • The amount due at the time the original creditor sold or assigned the debt

These extra provisions exist for third-party debt collectors because debts are often sold and resold before a debt collector finally sues the debtor. If the plaintiff doesn’t legally own the debt, they don’t have the right to sue you, and the lawsuit can be dismissed.

How Does the Fair Debt Collection Practices Act (FDCPA) Protect New Yorkers?

The FDCPA prohibits third-party debt collectors from debt collection activities such as harassing or abusing borrowers, using false or misleading representation, and other unfair practices. It requires debt collectors to provide proof of the debt when a borrower requests it. As a general rule, debt collectors aren’t allowed to contact your neighbors, family, or other third parties regarding your debt.

Under the FDCPA, debt collectors can’t make unlimited phone calls. They are limited to calling only up to seven times per debt per week. They can’t engage in a conversation with you about a particular debt more than once a week. If you don’t want to hear from the debt collector, you can tell them to stop contacting you, and they must comply.

It is legal under the FDCPA for a debt collector to contact you by email, text, or social media. If you want them to stop contacting you, you must specify which types of contact you want them to stop. If you tell them not to text, they can still call you. You must make it clear not to contact you by any means. Beware of the worst-case scenario though: If they can’t contact you anymore, they may decide to sue you.

The FDCPA is enforced by the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB). If a debt collector violates the FDCPA, you can file a complaint with the Consumer Financial Protection Bureau (CFPB), the New York City Department of Consumer Affairs (NYC residents only), and the New York attorney general.



Written By:

Lawyer John Coble

LinkedIn

John Coble has practiced as both a CPA and an attorney. John's legal specialties were tax law and bankruptcy law. Before starting his own firm, John worked for law offices, accounting firms, and one of America's largest banks. John handled almost 1,500 bankruptcy cases in the eig... read more about Lawyer John Coble

Attorney Paige Hooper

LinkedIn

Paige Hooper is a seasoned consumer bankruptcy attorney with 15 years of experience successfully representing debtors in Chapter 7, Chapter 11 and Chapter 13 cases. Paige began practicing bankruptcy law in 2006 and started her own solo, multi-state bankruptcy practice in 2012. Gi... read more about Attorney Paige Hooper

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