New York Debt Collection Laws

The federal government has the responsibility to provide protection for its citizens. In light of such a mandate, there are federal laws protecting borrowers from unfair and harassing treatment at the hands of debt collectors who are attempting to collect past due and default account payments for another. Those laws are best represented by the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. Many states also have additional laws reinforcing or expanding on those statutes. For most consumers, however, there are options for relieving and negotiating debt issues with the help of an attorney before they reach collection agencies.

New York Debt Collection Laws

New York is one of the states that reinforces and applies federal debt collection laws to protect its citizens from harassment and abuse. They also have enacted state laws expanding on those protections for the citizens of New York state. Any abuses of those laws are addressed by the New York office of the Attorney General or a local district attorney.

New York Statute of Limitations

  • New York has enacted a statute of limitations of 6 years on filing suit for non-payment of written contracts and promissory notes, although creditors may still pursue payment through letters and phone calls, subject to state and federal statutes
  • The New York statute of limitations for oral agreements and open accounts is 4 years.

Collections Practices and Rules for New York

While New York state follows all of the federal laws concerning debt collection protection, it also expands on those laws, applying them not only to debt collection agents and agencies, but to principal creditors, as well. In addition, while the state does not require licensing of debt collection agencies, some cities do, especially New York City. Abuses of these laws are misdemeanours in the state and carry penalties for each offense. They should be reported to the office of the state Attorney General or the local district attorney.

Legal Collections Actions

Creditors and debt collection agents or agencies are authorized to pursue the payment of any debt, which is in arrears, or default according to the terms of the original contract.

Illegal Collections Actions

  • Misrepresenting themselves as law enforcement officers or government representatives of New York or threatening to use a right or claiming a right that the debt collection agent knows does not exist
  • Collecting or charging any fees, court costs, or expenses aside from those legally chargeable to a debtor
  • Revealing or threatening to reveal any false information about the debtor's financial or debt status or a claim that is in dispute without also revealing that that claim is in dispute
  • Revealing or threatening to reveal any information about the borrower's debt status to an employer unless they are legally authorized to pursue wage garnishment or assignment
  • Abusing or harassing a debtor with repeated calls or calls at unreasonable and inconvenient hours without the debtors authorization
  • Threatening any punitive actions against the debtor which the creditor or debt collection agent would not normally take or is not planning to take

Laws for Debt Harassment in New York

Harassment is illegal under both New York state and federal laws. In New York, the penalty for harassment by a debt collection agent or agency is a misdemeanour.

New York Debt Negotiation and Settlement Rules

There are alternatives for borrowers who have fallen behind in their payments other than facing debt collection agencies. One option is allowing a debt negotiation settlement or negotiation company to represent the borrower to their creditor or collection agency. However, this can hold many avenues of abuse for unscrupulous companies.

It is often a better option to choose an attorney skilled in these functions to protect the debtor from such abuses as:

  • High fees for minimal or nonexistent service
  • Causing more missed payments and bad faith with their creditors by advising them to avoid contact with those creditors and trusting negotiators who fail to represent them
  • Failing to follow through with appropriate reports to credit bureaus and further damaging the borrower's credit rating
  • Failing to properly form and report settlement agreements, even sometimes resulting in additional taxes on reduced payments as income
  • Inability to negotiate with creditors of secured debts for forbearance or hardship consideration

Help from a New York Debt Collection Attorney

There are many opportunities for abuse when debtors have fallen behind or are in default of loan payments. They are often at the mercy of creditors or debt collection agencies with few resources to protect themselves. An attorney can provide the protection these consumers need and represent them when they have been abused, helping restore their name, their financial status, and their credit rating.

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