Are You Within New York’s Statute of Limitations for Debt Collection Litigation?

Wooden gavel.Thinking about bringing an action against a nonpaying client or party? Then you need to know the statute of limitations for New York debt collection litigation. You need to know this in order to bring your case to court in a timely manner. Failure to bring the action within the statute of limitations can result in more than a slap on the wrist. It can result in a lawsuit filed against you and your attorney with costs and sanctions to consider.

What is a statute of limitations?

Every claim or case has a period of limitation or timeframe in which someone can bring an action. The set timeframe, or in legalese, the statute of limitation may differ depending on the state or county. New York’s statute of limitations appears on the court’s website.

The type of case or claim that you have determines the applicable statute of limitations.

So, if you wish to enforce your rights to payment, make sure that you do so within the time allowed for in the statute of limitations.

The statute of limitations and New York debt collection.

The statute of limitations for actions brought in New York for debt collection or breach of contract is dependent upon several factors. Most commonly they are:

  1. The state in which the claim arose.
    If the underlying claim arose in your home state, then the law in your home state determines the timeframe for you to bring the action. New York will not allow you to bypass your home state’s statute when filing your debt collection litigation in New York in an attempt to take advantage of New York’s possible longer time to file.
  2. Your underlying contract or agreement.
    Your contract or agreement may specify the laws of the state that will govern disputes and/or where you must file suit. The two need not be the same. So, if you are an Ohio company, you may provide that New York law can govern and you can bring suit in New York or Ohio.
  3. The underlying cause of action.
    Your performance, as required by the terms of your agreement, will dictate which statute will apply. For example, if you sold goods and the order of the sale of goods was part of your agreement with the customer, chances are the Uniform Commercial Code (UCC) will govern your case. The UCC allows four (4) years rather than a breach of contract case that provides for six (6) years.If you provided professional services, maintained equipment or lent money and have a claim based upon your client or customer’s nonpayment or failure to do their part, a different statute can apply.
  4. Whether there was extension of the statute.
    There are situations that can extend the statute of limitations. They allow creditors longer periods to file a New York debt collection case. These include death of a claimant, infancy and disability, and payment.

The statute of limitations has lapsed.

Should the statute lapse, a creditor can still try to obtain payment and not abandon efforts to do so. However, past demand – a New York debt collection litigation filed when the statute has passed is unwise and can be costly, not only for the party looking to enforce their claim but their counsel as well. The party looking to enforce their rights to payment may be innocent and truly unaware that the statute lapsed and they had no legal right to file the case. Regardless, the creditor may have liability for bringing the action with the attendant sanctions and costs.

It may be tricky to determine which statute of limitations to apply to your New York debt collection case. Have an experienced and trusted NY collections attorney assess the facts of your case. FFGN only handles debt collection cases and our experience will be invaluable as you review your options. Please get in touch with us to review the specifics of your case.