New York Debt Collection Claim Practices

one hundred dollar billsNew York debt collection claim practices have been in the news. There’s been publicity recently about debt collection practices of the merchant cash-advance industry. It can shed light on how to avoid legal disputes in your debt collection claim.

It doesn’t matter whether it’s money loaned, services rendered, or goods sold and delivered. You want your money. When seeking to enforce your right to get your money, the borrower/client sometimes looks to delay. They may vehemently thwart the debt collection claim by creating issues where none existed. They may also file baseless counterclaims.

Previously we have suggested that the best way to avoid bogus defenses and bypass debt collection litigation is  by use of confessions of judgment

New York Debt Collection – Who’s the Bad Guy?

Radio station WNYC’s recent report expounded on last week’s Bloomberg article highlighting the commonplace use of the confession of judgment by cash-advance merchants.  

The reports refer to confessions of judgment as New York’s arcane, legal loopholes. They say they allow a lender to immediately seize a borrower’s assets. They say the lender can do so without notice. The reports further state that borrowers have little or no chance to defend themselves.  

The reports highlight lenders utilizing the NY court system to avoid legal disputes in their New York debt collection claim. This allows them to rush to judgment. They do so by executing on the judgment and restraining monies in their delinquent customer’s account(s). The lenders do this whether located in or outside of New York state.

New York Debt Collection & Confessions of Judgment

As with any industry, some professionals have unsavory practices. They try to take advantage of this wonderful, widely-used tool. We have prepared many confessions of judgment for clients. That’s what we do when their customers want to come to terms. Then all parties can agree on repayment terms.  It also works for clients who are looking to best protect themselves. The customer/debtor signing a confession of judgment adds extra security to what might be considered a risky deal.

The requirements of a confession of judgment are set forth in NY’s Civil Practice and Rules Section 3218. They do not require notice of default to the borrower/customer. And this, Bloomberg and NPR report, is a sticking point. Does this concern you or your client? Then, you may include a requirement to give your customer/borrower notice and a chance to make good their default.

If you are selling on terms, you are a lender. It’s time to protect yourself as one. Why not avail yourself of New York’s secret remedies? Protect yourself and avoid bogus defenses, counterclaims, delays. Avoid legal disputes in your New York debt collection claim. Contact FFGN at (212) 686-0100 or drop us an email.