New York’s New Debt Collection Regulations
In addition to federal laws, New York State has its own debt collection regulations. New York has recently amended its debt collection regulations to offer more consumer protection. The new regulations went into effect in August 2015. These new regulations apply only to collection agencies or purchasers of consumer debts. They do not apply to an original creditor collecting its own debts and they do not apply to the collection of business debts.
Companies that purchase debts are becoming increasingly more popular. However, the debt-buyer industry is notorious for having little to no information about the debts it purchases and tries to collect on. Debt buyers often try to collect debts that have already been paid or settled (called “zombie” debts because they don’t go away) or for which the statute of limitations (the time period in which the debt buyer must sue you) has long passed. By including the debt buyers into the new law, New York hopes to combat some of these abuses and provide consumers with more information about the debts which are being pursued.
The new regulations require debt collectors to provide you with certain information either in the initial contact with you, or within five days after that initial contact. The required information includes the following:
- General information about your rights as a consumer. The debt collector must provide you with a list of the collection activities prohibited by the federal Fair Debt Collection Practices Act (FDCPA). It must also list the types of income that is protected from collection if the collector ends up getting a judgment against the debtor.
- Information about the debt. The debt collector must provide you with information about the identity of the original creditor and an itemized accounting of the debt. A new trend is that certain companies are buying debts, and sometimes these debts are very old. You may not have any recollection of what the original debt was for. If the debt collector does not have this information, they will not be able to comply with the new regulations, so they cannot legally collect the debt. The information the debt collector must be able to provide you with includes:
- The amount of the debt when the original creditor sent it to collection;
- The amount of interest accrued since the debt was sent to collection;
- The amount of other fees and charges;
- The payments you have made since the debt was sent to collection.
- Information regarding the statute of limitations. The statute of limitations is the time limit for collection on the debt. Some debts are too old to try to collect on under the law that applies to those particular debts. The debt collector must be able to figure out if the statute of limitations has passed. If the debt collector knows, or should know, that the debt is too old to collect on, they must do the following:
- Tell you that the statute of limitations may have expired;
- Tell you that it is a violation of the federal FDCPA (Fair Debt Collections Practices Act) to sue to collect a debt for which the statute of limitations has expired, however, simply trying to collect the debt without suing is permitted;
- Tell you that you do not have to admit to owing the debt, promise to pay the debt, or give up your rights regarding the statute of limitations;
- Tell you that, if you do admit to owing the debt or promise to pay the debt, then the statute of limitations my restart so that the debt collector can sue you on that debt.
If you do not agree that you owe the debt or you think the amount owed is incorrect, the new regulations offer some protections for you as well. You can request that the debt collector provide you with information to show that the debt belongs to you and/or that the amount is correct. The debt collector must provide you with this information within 60 days. By law, the debt collector is not allowed to continue trying to collect on the debt until the required information is provided. The information the debt collector must provide to you if you dispute the debt in writing includes:
- Any contract or application you signed related to the debt if it is available (if it is not available, then the collector may show a document created by the original creditor (not the debt collector), showing that you owe the debt);
- The statement the original creditor sent to you showing that it planned to charge-off the debt and send it to a debt collector;
- A statement describing how the debt collector acquired your debt from the original creditor;
- Information regarding any prior settlement of the debt.
If you are able to pay the debt, the new law offers additional protections. If you and the debt collector agree to a payment schedule or other settlement, the debt collector must provide you with a written confirmation of the agreement within five days. If you get on a payment plan with the debt collector, you are entitled to quarterly accounting of payments you have made. Once you pay off the debt, the debt collector must give you a written confirmation that you paid off the debt within 20 days.
Legal Editors: Marshal Coleman and Steven Bennett, September 2015
Changes may occur in this area of law. The information provided is brought to you as a public service with the help and assistance of volunteer legal editors, and is intended to help you better understand the law in general. It is not intended to be legal advice regarding your particular problem or to substitute for the advice of a lawyer.