N.Y. Governor Signs Debt Collection Bill Into Law

CORRECTION: This article has been updated to reflect that only parts of the law went into effect immediately. Only the section including the name of the law actually went into effect immediately. The new statute of limitations provisions will go into effect 150 days after the bill was signed into law; the remaining provisions will go into effect 180 days after the bill was signed into law.

The Governor of New York yesterday signed a trio of consumer protection bills into law, including a debt collection bill called the Consumer Credit Fairness Act that lowers the statute of limitations, increases the amount of information needed when filing collection lawsuits, and institute specific requirements when seeking default judgments.

Parts of the Consumer Credit Fairness Act — S.153/A.2382 — goes into effect immediately, according to a press release issued by the New York Department of Financial Services, but the majority of the Act’s provisions will not go into effect for 150 days now that it has been signed into law.

“When bad actors try and take advantage of consumers, New York will fight back,” said Gov. Hochul, in a statement. “I’m proud to be signing legislation that will protect New Yorkers from unscrupulous practices by debt collectors and utility companies. These three new laws will make New York a better, fairer place for all consumers.” 

S.153 requires that any complaint in a collection lawsuit now contain:

  • The name of the original creditor
  • The last four digits of the account number printed on the most recent monthly statement recording a purchase transaction, last payment, or balance transfer
  • The date and amount of the last payment
  • An itemization of the amount sought
  • The account balance printed on the most recent monthly statement recording a purchase transaction, last payment, or balance transfer
  • Whether the plaintiff is the original creditor, and if not, information about the sale and assignment of the debt
  • A copy of the contract or other written instrument on which the action is based attached to the complaint

The bill also lowers the statute of limitations on consumer credit actions to three years, from six.

Individuals sued for unpaid debts in consumer credit actions will now be allowed to use improper service as a defense and preserve that defense for trial without having to file a separate motion to dismiss.

Plaintiffs in consumer credit actions will also have to provide additional notices to the clerk of the court, who will be responsible for mailing those notices to defendants.

When seeking default judgments for consumer credit actions, the plaintiffs will need to include:

  • An affidavit by the original creditor of the facts constituting the debt, the default in payment, the sale or assignment of the debt, and the amount due at the time of sale or assignment
  • For each subsequent assignment or sale of the debt to another entity, an affidavit of sale of the debt by the debt seller, completed by the seller or assignor
  • An affidavit of a witness of the plaintiff, which includes a chain of title of the debt, completed by the plaintiff or plaintiff’s witness

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