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In a NutshellNew York state's Consumer Credit Fairness Act (CCFA), reduced the statute of limitations for consumer debts from six years to three years. It also added notification requirements for creditors and debt collectors that sue borrowers. Under the CCFA, the statute of limitations can’t be restarted if a borrower makes a payment or acknowledges a debt. Finally, under the CCFA, debt collectors must be able to prove they own the debt when they sue to collect on it.
Written by Lawyer John Coble. Legally reviewed by Attorney Paige Hooper
Updated August 28, 2023
There are both federal and state laws that protect New York consumers from unfair, abusive, and deceptive practices by debt collectors.
The federal Fair Debt Collection Practices Act (FDCPA) is the primary federal law governing debt collectors. It limits when and how debt collectors can contact you. The FDCPA generally only applies to third-party debt collectors, not the original creditor.
In addition to the FDCPA, New Yorkers are also protected by the state’s Consumer Credit Fairness Act (CCFA), which took effect in April 2022. As its name implies, the CCFA only applies to consumer debt, such as credit card debt, medical debt, and personal loans. It doesn’t apply to other types of debt like business debt. Most of the CCFA’s requirements apply to both original creditors and third-party debt collectors.
Also, some cities, like New York City and Buffalo, have their own debt collection regulations as an extra layer of protection for residents. Whenever a debt collector or debt collection agency communicates with a resident in that city, it must comply with city, state, and federal laws.
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Read more Google reviews ⇾ Get Free HelpThe Consumer Credit Fairness Act made several important changes to how debt collection works in the state of New York. Here are three of the most notable changes:
The statute of limitations establishes a time limit for a creditor to sue you to collect on a debt. After this time has passed, the debt is considered to be time-barred. If a creditor or debt collector sues you for a time-barred debt, you can use the statute of limitations as a defense. If the statute of limitations has expired, the judge will usually dismiss the debt collection lawsuit, but only if you respond to the lawsuit and raise the defense.
The CCFA reduced the statute of limitations for consumer credit transactions in New York state from six years to three years. three years. It also addressed the long-standing issue of original creditors and debt collectors tricking borrowers into restarting the statute of limitations. Before the CCFA, if you made a payment on the time-barred account or even acknowledged you owed the money, the statute of limitations would start over. Under the CCFA, once the statute of limitations on a debt has expired, it can’t be restarted by the debtor making a payment or acknowledging the debt.
If you get sued by a debt collector but you aren’t notified about the lawsuit, how can you defend yourself? Many debt collectors have sued borrowers and gotten default judgments without giving proper notice of the lawsuit. Simply put, a default judgment means you lose because you didn’t show up. These judgments can lead to wage garnishment and serious collections measures. The CCFA includes a new notice requirement for both original creditors and debt collectors that’s intended to prevent this.
Under the new provision, the plaintiff (the person or company that files a lawsuit) must still notify the defendant (the person being sued) about the lawsuit in accordance with the state’s laws.The plaintiff must then file an additional notice with the court. The court clerk sends this notice to the defendant. Since this notice comes directly from the court, it provides an additional layer of protection against a defendant losing a case simply because they didn’t know about it.
The CCFA notice required under New York law must:
If this letter is returned as undeliverable, the court can’t issue a default judgment for the defendant’s failure to answer the lawsuit. These notice requirements will help ensure that defendants in consumer debt collection actions have every opportunity to defend their cases and that they know their options for legal advice and assistance.
In the past, third-party debt collectors have won lawsuits — often through default judgments — even though they had no proof they owned the debt and could legally collect on it. A final important change under the CCFA requires debt collectors and debt buyers to prove they can legally collect on a debt. They must do this by including certain information in the complaint, which is the initial document in a lawsuit that explains why the plaintiff is suing the defendant.
Under the CCFA, the plaintiff must provide the original contract or a charge-off statement for revolving accounts like credit cards. They must also include certain information about the debt in the complaint, including:
If the plaintiff is a third-party debt collector, the complaint must ALSO include all of the following:
These extra provisions exist for third-party debt collectors because debts are often sold and resold before a debt collector finally sues the debtor. If the plaintiff doesn’t legally own the debt, they don’t have the right to sue you, and the lawsuit can be dismissed.
The FDCPA prohibits third-party debt collectors from debt collection activities such as harassing or abusing borrowers, using false or misleading representation, and other unfair practices. It requires debt collectors to provide proof of the debt when a borrower requests it. As a general rule, debt collectors aren’t allowed to contact your neighbors, family, or other third parties regarding your debt.
Under the FDCPA, debt collectors can’t make unlimited phone calls. They are limited to calling only up to seven times per debt per week. They can’t engage in a conversation with you about a particular debt more than once a week. If you don’t want to hear from the debt collector, you can tell them to stop contacting you, and they must comply.
It is legal under the FDCPA for a debt collector to contact you by email, text, or social media. If you want them to stop contacting you, you must specify which types of contact you want them to stop. If you tell them not to text, they can still call you. You must make it clear not to contact you by any means. Beware of the worst-case scenario though: If they can’t contact you anymore, they may decide to sue you.
The FDCPA is enforced by the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB). If a debt collector violates the FDCPA, you can file a complaint with the Consumer Financial Protection Bureau (CFPB), the New York City Department of Consumer Affairs (NYC residents only), and the New York attorney general.