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How the New York Consumer Credit Fairness Act Benefits Debtors

Massive blow to Debt Collectors- New York passes legislation that alters how collection lawsuits are filed.

New York Governor Hochul recently signed into law Senate Bill S153 also known as the Consumer Credit Fairness Act. The Act amends the provisions of New York Civil Practice Law and Rules, also known as the CPLR, that significantly impacts debt collection lawsuits filed by creditors and third-party debt collectors.  

What changes were made by the Consumer Credit Fairness Act?

The key changes made by the Consumer Credit Fairness Act include the following:

  • For most debt collection lawsuits arising out of a consumer credit transaction, the statute of limitations is reduced from six years to three years.
  • A payment toward the debt or “written or oral affirmation” of ownership of the debt by a consumer does not revive or extend the limitations period.
  • A debt collector must attach to the complaint the contract upon which the action is based.
  • The complaint must also include, among other things, the name of the original creditor, the last four digits of the account number, and the date and amount of the last payment.
  • A debt collector must provide a completed “additional notice of lawsuit” to the court clerk when filing the proof of service for the complaint, which the clerk will then mail to the consumer.
  • If a debt collector seeks a default judgment, it must submit supporting affidavits from the original creditor, any prior assignors or sellers of the debt, and a witness for the collector who can verify the chain of title for the debt.
  • All debt collectors requesting a default judgment must also include an affidavit, stating that the statute of limitations to enforce the debt has not expired.

What benefits does the Consumer Credit Fairness Act give to debtors?

By reducing the statute of limitations for debt collection lawsuits from six years to three years, the Consumer Credit Fairness Act will significantly reduce the amount of debt involved in a lawsuit. Furthermore, the Consumer Credit Fairness Act will provide more transparency to what debt collectors are attempting to do once a lawsuit is filed how much debt collectors are allowed to take legal action for. By doing so, the Consumer Credit Fairness Act will target borderline exploitative debt collectors that attempt to circumvent the law. As stated by New York State Senator Kevin Thomas, “Abusive and exploitative debt collection lawsuits have become an epidemic across New York State. The consequences of these lawsuits—which often prey on the elderly, disabled, and low- and moderate-income New Yorkers—are devastating, especially at a time when New Yorkers are already suffering financial difficulties as a result of COVID-19. The Consumer Credit Fairness Act will stop these abusive and often illegal debt collection practices in their tracks.”

Do the changes made by Consumer Credit Fairness Act apply immediately?

Apart from the reduction of the statute of limitations from six years to three years and the prohibition on revival or extension of the statute of limitations period which becomes effective on April 6, 2022, the other changes described above become effective on May 6, 2022.

The importance of hiring an Experienced Consumer Debt Defense Attorney:

These changes along with the changes made by the New York Fair Consumer Judgment Interest Act, make it more important than ever to speak with an attorney that is experienced with consumer debt defense. Clair Gjertsen & Weathers PLLC is an experienced Consumer Debt Defense law firm in New York . We negotiate with debt collection law firms and remove holds on your bank accounts or wages garnishments. 

For additional questions regarding the consumer debt defense process, we invite you to contact Clair Gjertsen & Weathers PLLC by calling 914-472-6202. We look forward to hearing from you.

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