Having your non-paying client acknowledge their debt in writing can extend your time to file a New York debt collection case. If the writing signed by your client contains the necessary elements, it may extend the time for you to file past the allowable statute of limitations.
New York CPLR Section 201 details the length of time to file actions within New York. The allowable time to file an action, what’s known as the statute of limitations, depends on the underlying cause of action.
The allowable time during which you can file the action for debt collection claims is determined by the underlying cause of action — whether there were services rendered or goods sold and delivered. The types of services will further affect your available time to file. For example, New York recently reduced the time for some medical providers to file debt collection cases to three years.
Extending the Time to File a New York Debt Collection Case
There are situations by which you are able to extend or toll the statute of limitations. One of the ways is to obtain a proper acknowledgment of the debt in writing.
Acknowledgments of debt must be in writing as per New York case law. There must not be anything inconsistent with the promise to pay. If the debt is properly acknowledged, then the statute of limitations will be extended from the date of the writing.
For example, if a subcontractor renders services and fails to sue within six years they may still be able to sue if, following that time period, the general contractor, perhaps seeking additional services, agreed monies were owed to the subcontractor and acknowledged the debt in writing, clearly setting forth an intention to repay. Merely having the general contractor state they owe monies is not sufficient to restart the statute of limitations.
Can an Acknowledgement of Debt Extend the Statute of Limitation on a Promissory Note?
No, a promissory note is only payable upon demand or a certain date. After six years, the note is stale. However, an acknowledgment of the debt in a separate writing or promissory note that restates the underlying consideration could revive the debt.
Can an Acknowledgement of Debt Extend the Statute of Limitations to File a Notice of Mechanics’ Lien?
Other than an administrative order from the governor extending the time to file, there is nothing that extends the time to file a mechanics’ lien in New York state.
Although you cannot file a late mechanics’ lien in New York, you can seek payment and file suit against the party you contracted with.
If you need help collecting a debt and are not sure you have a claim, contact Frank, Frank, Goldstein and Nager for a free consultation. We have the experience that pays….