Extending the Statute of Limitations in New York Debt Collection Cases

A stopwatch with the word deadline to represent Extending the Statute of LimitationsWorried it’s too late to bring a debt collection case? Don’t be. There are many ways to extend or toll the statute of limitations for New York debt collection cases. Successfully extending the statute of limitations, can afford you more time to start your case.

The statute of limitations is the length of time allowed to file an action. The time varies from state to state and is set by state legislation.

It is not always possible for a creditor to pursue legal action within the applicable statute of limitations. When that happens, it’s imperative to know the ways New York allows you to extend the time for pursuing legal action, known as tolling the statute of limitations.

News York offers several ways to toll the statute of limitations.  Here are the most pertinent ways that relate to debt collection:

1. Payment

A payment, if properly earmarked for an almost expiring debt, can extend the life of the debt, allowing you to restart and renew the statute.

Creditors who enter into long-term payment plans with their customers appreciate this way of extending the statute of limitations. Customers or clients may make regular small payments to reduce a large balance but not make a “dent” in the balance owed. Without tolling the statute of limitations, if the small customer payments continued for three, four, or six years, you would not be able to pursue legal action to collect the balance.

2) Administrative Order

During New York on Pause due to COVID-19 and during NY’s recovery, Governer Cuomo signed Administrative Order 202.8 extending the statute of limitations from March 22, 2020, to  November 3, 2020. Creditors whose allowable time to file expired on or between those dates can now file and/or respond through November 3, 2020.

Note that the extension was not a blanket extension giving all creditors an additional 90 or so days to file their claims but extended the filing time for those whose time to file would have expired between the time when the governor issued his order.

3. Acknowledgment of the Debt

Proper acknowledgment of a debt due and owing by the liable party will extend the statute of limitations. In the event the statute is running out or has already expired, proper acknowledgment of the debt will restart the applicable statute of limitations.

If your client promised you money and offered to put their intention to pay in writing. even 10 years later, the time to sue, six years, restarts. It pays to “get it in writing.”

4. Alternative Options

There are a few ways to toll the statute that, on rare occasions, can impact debt collection.  They are: defendant’s absence from state or residence under false name, infancy, insanity, war, or death. With these, you may not realize the full length of a new statute of limitations as the time may be shorter.

Depending on the facts and circumstance of your case, no two are the same, the case you considered too late for debt collection might turn out to be timely. If you think you have a claim, you should consult an experienced debt collection attorney to advise you. Contact Frank, Frank, Goldstein & Nager for a free consultation.  We have the experience that pays…