New York State Debt Collection Laws and Regulations

When it comes to debt collection, consumers with debt have many rights and protections. But these can be hard to understand, so it’s hard to tell if a creditor or debt collector has violated the law. And even if a consumer can tell that a debt collector broke the law, it might not be clear what the consumer can do about it. This is why we created the following article. In it, we’ll provide an overview of what your rights are if someone is trying to collect a debt from you in New York. We’ll also cover state and local consumer protection regulations.

New York State Residents Have Both Federal and State Protection 

Residents of New York are better guarded against predatory debt collectors than residents in most other states. This is because there are debt collection regulations from at least two sources.

First, there’s the Fair Debt Collection Practices Act (FDCPA). This law protects consumers from deceptive and unfair debt collection practices. And because it’s a federal law, it applies to everyone, no matter what state they’re in. The FDCPA also provides potential legal remedies to consumers who fall victim to FDCPA violations.

Second, there are New York state laws and regulations. For example, there’s the Consumer Credit Fairness Act (CCFA). This new law offers additional protections to New York citizens that go beyond what the FDCPA offers.

Some places also have local laws that apply to certain debt collection activities. For instance, New York City has regulations that go beyond what’s required by state or federal law.

How Does the FDCPA Protect Consumers? 

The Federal Trade Commission (FTC) enforces the FDCPA. This means if a creditor or debt collector gets punished for violating the FDCPA, it’ll come from the FTC. But consumers can also sue the debt collector directly for FDCPA violations. 

The FDCPA also identifies what debt collectors can and can’t do when they try to collect a debt. If a debt collector does any of the following when trying to collect a debt from you, they may have violated the FDCPA:

• Harassing, abusing, or misleading you to trick or coerce you into paying a debt. This includes threatening you with arrest.

• Discussing your debt with third parties (with some exceptions).

• Calling you at work after you ask them to stop.

• Contacting you directly to collect the debt even though you told them you have an attorney representing you during the debt collection process.

Also, if the statute of limitations for your debt has expired, debt collectors can’t threaten you with legal action if you don’t pay your back debt. Keep in mind that a debt collector can still contact you under certain conditions to try and collect this time-barred debt.

The FDCPA Doesn't Apply to Original Creditors 

One thing to keep in mind about the FDCPA is that it doesn’t apply to everyone who attempts to collect a debt from you. It mostly applies to debt collectors and debt buyers. 

A debt buyer is someone who buys debt from someone else and tries to collect it. The purchased debt could come from the original creditor or another debt buyer. Many of the debts purchased by debt buyers don’t ever get collected. However, the debt buyer purchases the debt for far less than what’s owed on it. So as long as they can collect at least some of the debts, they still make a profit. 

If the original creditor is trying to collect on the debt, the FDCPA’s requirements generally don’t apply to them. The original creditor is the entity that first lent you the money. For instance, imagine your unpaid debt is the result of a hospital stay. If the hospital tries to collect this debt, it would be considered an original creditor.

One exception to all of this is if an original creditor uses a different name when trying to recover a debt from you. In this scenario, the original creditor is implying that a third party (like a debt buyer) is trying to collect the debt. As a result, the FDCPA could apply.

New York's Debt Collection Laws Offer Residents Greater Protection 

As mentioned previously, New York state has consumer protections that go beyond the FDCPA. These protections typically relate to information debt collectors must give you during their initial contact or within five days of making first contact with you. Also, if you submit a written request, the debt collector must provide debt verification information within 60 days of your request.

Information Debt Collectors Must Tell You 

Debt collectors subject to New York’s debt collection laws must give you three main types of information.

The first type of information concerns your rights as a consumer. This includes information about illegal debt collection activities under the FDCPA. They must also give you information concerning the types of income that a debt collector can’t touch even if they get a debt collection judgment against you.

The second type of information relates to the debt they’re trying to collect from you. A New York debt collector must confirm who the original creditor was, how much you owe, and how your debt balance was calculated.

Lastly, you’ll receive information about the debt’s statute of limitations. This is the deadline for any legal action a creditor wants to take against you if they want the court’s help to collect a debt. If the statute of limitations has already expired or is about to expire, the New York debt collector must:

• Let you know that the statute of limitations has expired (if applicable).

• Remind you that the FDCPA prohibits a debt collection lawsuit if the time limit from the statute of limitations has expired. Just remember that debt collection attempts may continue.

• Tell you that you’re under no obligation to admit to the debt, promise to pay the debt, or waive your statute of limitation rights.

Debt Collectors Must Verify Debts Upon Request 

In most situations, if a debt collector thinks an individual owes a debt, the debt collector is correct. But sometimes mistakes happen. If you’re contacted about a debt you don’t think you owe or you disagree with the amount the collector says you owe, you can request debt verification from the debt collector. You must make this request in writing and the debt collector has 60 days to comply with your request. 

When responding to your request, they must give you the following information:

• The contract or application you signed relating to the debt. If this isn’t available, then the debt collector will give you a copy of a document from the original creditor showing you owe the debt.

• A statement from the original creditor showing its intent to charge off the debt and send it to a debt collector. This typically occurs by selling your debt to a debt buyer.

• A statement explaining how the current debt collector obtained the debt from the original creditor.

• If applicable, any information concerning an earlier settlement of the debt.

In some situations, you and the creditor may reach a payment agreement or debt settlement. In either situation, the debt collector must give you written confirmation within five days. While paying off the debt, they must give you a list of the debt payments you’ve been making every three months. And when you finally pay off the debt, the debt collector must confirm the debt has been paid off within 20 days. 

New York City Debt Collection Regulations Are Even Tougher 

Debt collection regulations are even stricter in New York City. In addition to what’s required under the FDCPA and state law, New York City debt collectors must also:

• Be licensed by the NYC Department of Consumer and Worker Protection (formerly known as the NYC Department of Consumer Affairs).

• Limit their debt collection telephone calls to just twice per week.

Some other municipalities in New York have local laws concerning debt collection as well. One such city is Buffalo, which also requires consumer debt collectors to be licensed.

The New CCFA Further Strengthens Consumer Protection

On Nov. 8, 2021, New York enacted the Consumer Credit Fairness Act (CCFA). This new law modified the New York Civil Practice Law and Rules (CPLR) by expanding consumer protections.

The CCFA is similar to the FDCPA in that it relates to debt collection activities. But it’s different because it places greater focus on how debt collections lawsuits occur in the state of New York. Key provisions in the CCFA include:

• The statute of limitations for most debt collection actions involving consumer debts was reduced from six to three years.

• A consumer who makes a payment on a debt doesn’t automatically reset or revive the statute of limitations deadline.

• The debt collector must give the consumer notice about the lawsuit. They must also provide information about defending against a debt collection lawsuit. This notice must explain what could happen if the consumer doesn’t respond to a pending debt collection lawsuit and list available resources to defend against the lawsuit.

• A creditor or debt collector who sues an individual can’t get a default judgment if notice about the debt collection lawsuit is undeliverable.

• The legal complaint must include a copy of the original agreement or contract giving rise to the consumer’s obligation to pay the debt. If the legal action is to collect an unpaid credit card debt, then the legal complaint must include a copy of the charge-off statement.

• When starting a debt collection lawsuit, the debt collector must provide several key pieces of information. These include the identity of the original creditor, the last four digits of the account number of the debt, when the last payment was made, the amount of the last payment on the debt, and a breakdown of the components of the total debt amount (such as fees and interest).

• If the plaintiff isn’t the original creditor, it can only get a default judgment against the consumer-defendant if it provides an affidavit (a sworn statement) from the original creditor. This affidavit will serve as partial validation that the plaintiff suing the consumer has the right to collect the debt even though it originated with someone else. 

This affidavit from the original creditor will contain information about the debt the plaintiff is now trying to collect. There will be certain information contained in this affidavit, such as:

• When and how the defendant defaulted on the debt.

• Details about the sale or transfer of the debt from the original creditor to a third party.

• How much the debt was when it was transferred or sold.

• An affidavit of sale by any entity selling the debt.

• An affidavit from the plaintiff confirming all parties who’ve owned the debt and how the debt worked its way from the original creditor to the debt collector now suing the defendant to collect the debt.

This last requirement is important in getting a default judgment. This is because the plaintiff usually isn’t the original creditor. What often happens is that the entity filing a lawsuit is the most recent debt collector trying to collect a debt in a long string of debt owners. And as debt gets passed from one debt collector to another, mistakes can occur. The mistakes could relate to who owes the debt, the amount of the debt, or the ability to sue someone to collect a debt.

The CCFA will be in full effect on May 7, 2022. But the statute of limitations provision is effective a month earlier on April 7, 2022.

Let's Summarize... 

If you’re a resident of New York, you enjoy a variety of legal protections against unfair and illegal debt collection tactics. Most of these rights come from federal and state law. At the federal level, there’s the Fair Debt Collection Practices Act. At the state level, there’s the Consumer Credit Fairness Act, which goes beyond the FDCPA. This state law gives consumers more rights during debt collection lawsuits. Some municipalities also have their own regulations for debt collection. NYC’s are particularly strong.

If you think a debt collector or creditor has violated any debt collection law, you can file a complaint with the New York Bureau of Consumer Frauds & Protection, the Federal Trade Commission, or the Consumer Financial Protection Bureau (CFPB). If you’d rather take legal action against the creditor or debt collector, you can contact a lawyer. They can offer you legal advice and might agree to take your case and file a lawsuit on your behalf.