What to Expect in New York Debt Collection Law in 2022

There are a number of new developments in New York State legislation that will change New York debt collection law and likely impact your receivables and collection claims, and ultimately your bottom line.

In November, New York Governor Kathy Hochul signed the Consumer Fairness Act, which takes effect on May 22, 2022, six months after the bill was signed into law. The new law has a direct impact on the collection of consumer claims within New York State and covers in-house collections efforts as well as those placed with a third-party debt collector including a collection attorney or agency.

There is one change that is most significant and, if you are working with consumers, will directly affect you. Most significantly, the Act reduces the statute of limitations — the period of time in which you have to file suit against a consumer debtor — from six years to three years.

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New NY State Law Will Reduce Legal Interest on Consumer Claims

percentage sign to represent Legal Interest on Consumer ClaimsThe legal rate of interest that can be awarded in a money judgment against an individual person is expected to be reduced as New York continues to protect the rights of individuals. The laws of usuary, which specifies the legal rate of interest that can be charged to a consumer is not at issue at this time. What is awaiting the Governor’s signature is the percentage rate of interest that can be included in a money judgment entered against an individual.

Until now, New York never differentiated between individuals and business entities (i.e. corporations, LLCs, LLPs, etc.) when it came to the legal interest that could be imputed or calculated and included in a money judgment. But, as New York continues to issue legislation aimed to increase consumer fairness, it’s starting to distinguish between consumers and corporations. The current legal rate of 9% interest charged to corporate entities will remain unchanged.

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Is the Increase in the Monetary Limit in the Civil Courts Good for Creditors?

gavel to represent monetary limit in the civil courtsEffective January 1, 2022, the jurisdictional limit of the New York civil courts will increase from $25,000 to $50,000. On its face, the availability of a lower-cost court to adjudicate claims which fall within the $25,000 to $50,000 sounds appealing. The cost outlay is significantly lower in the civil court compared to the supreme court. For example, the initial fee for an index number in the supreme court is $210 whereas it is $45 for commercial claims and $140 for consumer credit transactions in civil court. In order for a case to be assigned to a judge in the supreme court the fee is $95 whereas, in the civil court, there is no fee. But aside from the difference in cost advance, is the increase of the monetary limit in the civil courts good for creditors bringing debt collection claims in the New York state courts?

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A Good Collection Attorney Knows How to Benefit From New York’s Liberal Judgment Enforcement Policies

Photo of a statue of woman holding scales to represent a good collection attorney.There is no state as liberal as New York when it comes to commercial debt collection and the enforcement of judgments against commercial entities. New York Civil Practice and Rules Article 52 grants the judgment creditor many liberties and privileges when it comes to enforcing a judgment. To ensure the best possible outcome, you’ll want to make sure you have a good collection attorney who knows how to maneuver through New York’s liberal enforcement policies.

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