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New York’s Statute of Limitations for Credit Card Debt

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In a Nutshell

If you have credit card debt that you can’t pay, creditors and debt collectors can’t try to collect on it forever. Statute of limitations set a timeline for creditors and other debt collectors to collect on a debt. In New York, a recent law is strengthening the protections you get from the statute of limitations by shortening the timeline and not allowing creditors to restart the statute of limitations if you make a payment.

Written by Attorney John Coble
Updated April 12, 2022


If you have a lot of debt and aren’t able to make all your payments, you may get calls and letters from your lender or a debt collector. Your credit score will drop, and you can even be sued and have your wages or bank account garnished. But all states have statutes of limitations that prevent creditors from suing you after a certain number of years. Statutes of limitations define the amount of time a credit card company has to bring a debt collection lawsuit. After the time period expires, the creditor can still try to collect the debt, but not with a lawsuit. 

On April 7, 2022, New York’s statute of limitations (SOL) for credit card debt decreased from six years to three years. This article discusses the New York state, New York City, and federal rules regarding statutes of limitation. It also explains some new developments in New York’s statute of limitations for credit card debt.

State Laws Limit How Long Debt Collectors Can Pursue Consumers for Payment

Consumer debts like credit card debt are on the rise across the nation. Total household debt for American consumers is [1]. With this much debt, it’s no surprise that many New Yorkers have fallen behind or defaulted on their debts.

The good news is that there are several laws to protect New Yorkers from debt collectors. One form of protection is the statute of limitations. This deals with how long debt collectors have to sue you to collect a debt. There have been some recent changes to these laws that will soon provide more protection. These laws include the federal Fair Debt Collection Practices Act (FDCPA) and the New York Consumer Credit Fairness Act (CCFA), which is a state law. Note that both laws apply to debt collection agencies and debt buyers but not original creditors.  

New York City Debt Collection Law

New York City has its own debt collection laws that until recently, were the toughest debt collection protection laws in the country. One New York City law sets out requirements for debt collectors that try to collect debts barred by the statute of limitations. By law, if the statute of limitations has expired the collector must include the following statement in at least 12 point type and in a color different from other text in the collection letter:

“WE ARE REQUIRED BY LAW TO GIVE YOU THE FOLLOWING INFORMATION ABOUT THIS DEBT. The legal time limit (statute of limitations) for suing you to collect this debt has expired. However, if somebody sues you anyway to try to make you pay this debt, court rules REQUIRE YOU to tell the court that the statute of limitations has expired to prevent the creditor from obtaining a judgment. Even though the statute of limitations has expired, you may CHOOSE to make payments. However, BE AWARE: If you make a payment, the creditor’s right to sue you to make you pay the entire debt may START AGAIN.”

New York state has a similar requirement for communications from debt collectors. Before they accept payment by phone, debt collectors must give an oral warning that the statute of limitations will be extended with the payment. If you live in New York City, the debt collector’s warnings must meet the New York state and New York City requirements.

New York’s new Consumer Credit Fairness Act (CCFA), which governs consumer credit transactions, goes into effect this spring. Some provisions took effect on April 7, 2022, and others take effect on May 7, 2022. The act greatly improves New York’s debt collection and statute of limitation rules. The rest of this article will discuss these new developments.

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New York State’s Statute of Limitations on Consumer Debt Has Changed

The CCFA will bring two major changes to the statute of limitations for debt collection in New York.

The Statute of Limitations Will Be Reduced From 6 to 3 Years

Until recently, the statute of limitations for debt collectors in the state of New York was six years. The clock starts ticking on the date the borrower defaults on a debt. On April 7, 2022, the CCFA reduced the statute of limitations to three years. This means if a creditor sued you on April 5, 2022, for a five-year-old delinquent debt, you can’t use the statute of limitations as a defense because the debt isn’t time-barred. Time-barred means the statute of limitations hasn’t expired for the debt. If the creditor tried to sue you for the same debt on April 8, 2022, you can use the statute of limitations as a defense since the debt will be time-barred.

Debt Collectors Can’t Restart the Statute of Limitations

Debt collectors often try to collect on time-barred debts. If you make a payment or you affirm you owe the debt, the statute of limitations restarts on the date of your last payment. For example, if you defaulted on a debt seven years ago it’s time-barred. But if you make a payment on the debt or agree that you owe the debt, the statute of limitations restarts and the debt is no longer time-barred. The CCFA also changed this on April 7, 2022. Debt collectors will no longer be able to restart the statute of limitations due to your having made a recent payment or affirmed the debt.

Since the law will soon change, you may be contacted by debt collectors that try to trick you into extending the statute of limitations. If you’re being contacted by debt collectors, it’s best to contact a New York consumer attorney immediately. You’ll be in much better shape in April, assuming you make no mistakes now. 

How the CCFA Can Help You Even if Your Debt Isn’t Time-Barred

Even if your debt hasn’t reached its statute of limitations, the CCFA still provides important protections when it comes to being notified of debt collection cases. Starting May 7, 2022, the CCFA will require debt collectors to notify the court when they file a lawsuit. Then the clerk of the court has to mail a notice of the lawsuit to the person who’s being sued — also called the defendant. This is to prevent creditor-plaintiffs from getting default judgments when defendants don’t know about the lawsuit or don’t have enough time to answer the suit.

The CCFA also addresses debts that are sold by the original creditor to debt buyers, third-party debt collectors, or collection agencies. Debts are often bought and sold, and the CCFA wants to ensure that the collector suing you actually has the right to collect that debt. Starting May 7, 2022, any debt collector that isn’t the original creditor has to prove to the court that they have the right to sue to collect the debt. 

The FDCPA Provides Consumers Protection at the Federal Level

The FDCPA is a federal law that protects consumers from abusive debt collection practices. It applies to debt buyers and debt collectors. If the original creditor uses a different name when collecting the debt, it may be treated like a third-party debt collector.

The FDCPA prohibits debt collectors from many abusive practices, including:

  • Contacting your friends, neighbors, or relatives regarding your debt, in most cases

  • Calling you at work if you’ve asked them not to.

  • Threatening, abusing, harassing, or misleading you into paying the debt.

  • Threatening legal action against a consumer to collect a debt with an expired statute of limitations. If your debt is time-barred, the FDCPA can provide debt relief since you can force the debt collector to stop contacting you and you may be entitled to damages.

The Consumer Financial Protection Bureau (CFPB) creates interpretative regulations based on the FDCPA. These rules are known as Regulation F. The Federal Trade Commission (FTC) and the CFPB enforce the FDCPA. You can file a lawsuit against debt collectors that violate the FDCPA. You can also use FDCPA violations by a debt collector as a defense if a debt collector sues you.  

If you’re considering filing a FDCPA lawsuit against a debt collector because they threatened to sue you on a time-barred debt, you may give the debt collector the opportunity to essentially revive the old debt. So, if you’re thinking of suing a debt collector, it’s always best to speak to a consumer attorney in New York first to make sure you know the potential risks. 

Let’s Summarize…

New York’s statute of limitations and regulations protect against abuses by debt collectors. The new law that went into effect on April 7, 2022, provides even stronger protection. It reduces the statute of limitations from six years to three years and puts an end to past practices that restarted the statute of limitations when a borrower made a payment or admitted to owing a debt.

If a debt collector sues you, you should file a timely answer with the court even if you don’t believe you owe the debt or if you know it’s time-barred. If the debt is time-barred by the statute of limitations you can have the debt collector’s claim dismissed and countersue for an FDCPA violation. You can also file a complaint with the CFPB and the New York attorney general.


Sources:

  1. Center for Microeconomic Data. (2022, February). HOUSEHOLD DEBT AND CREDIT REPORT (Q4 2021). Retrieved February 1, 2022, from https://www.newyorkfed.org/microeconomics/hhdc

Written By:

Attorney 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 Attorney John Coble

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