Who Is Responsible for the Delay in New York Debt Collection Litigation?

Photo of NYC to represent New York debt collection litigation delayJustice can be slow. Debt collection litigation, especially in New York, can take time. When it comes to the delay in New York debt collection litigation cases, people are quick to point fingers. Some blame the governor, who slashed the budget and cut the number of administrative personnel in the Courts.

However, New York state’s attorney general and deputy chief administrative judge believe otherwise.

In 2016, then New York attorney general Eric Schneiderman and Judge Fern Fisher, deputy chief administrative judge for New York City courts, filed an action against an out-of-state creditor, their affiliated company’s New York City law firm, and its lawyers and associates.

That out-of-state creditor was Northern Leasing, which financed agreements for credit card processing equipment. Northern Leasing and its affiliates, were the plaintiff in more than 30,000 cases.

The New York Debt Collection Delay

Schneiderman and Fisher’s lawsuit details the large volume of cases brought by the out-of-state creditor and its affiliated companies against non-residents of New York state. Court documents detail the sheer number of cases brought by the law firm on behalf of their out of state creditors. The cases went to New York courts despite the fact neither the plaintiff, it’s affiliate companies nor 95% of the lessee borrowers had any connection to the state.

It should be noted that out-of-state creditors are able to pick New York as a place to air their disputes. They can do so by providing a venue clause in their contract, having any dispute heard by and decided by the New York state courts.

The courts do not require either party to have a connection to the state.

However, in this situation, the sheer volume of cases filed — the plaintiff and its counsel obtaining more than 19,000 default judgments — have taken a toll on the New York county civil court system for years. Actions that delay the court’s ability to preside over your New York debt collection case.

In 2014 alone, the plaintiff obtained 4,124 judgments, representing more than 40% of the 9,933 default judgments entered in the New York county civil court. A year later, they obtained close to half of all judgments.

Changing the System

In addition to the volume of cases filed, the case highlights multiple reasons as to why the leases appear suspect.

The leases are, according to the attorney general, suspect and used as a vehicle to commit fraud. The leases seem to be never-ending. The lessee signs off that the equipment is in good condition before receiving the equipment. The payments exceed the value of the machine, which makes it difficult to return the equipment at the end of the four-year lease period. It’s also said there were lessees signature forgeries, the print illegible, the terms one-sided to favor the creditor, and more.

The litigation against the leasing company, its affiliates, and attorneys continues. However, the effect of the cases filed is burdensome.

Most recently New York State changed the law to prohibit the entry of judgment against a non-resident debtor based upon a confession of judgment. Essentially, unscrupulous lenders tried to use New York courts to enter judgments against non-New York residents. This leads to a decrease in the number of judgments entered based on confession of judgment.

Despite court delays, there are still time-efficient ways to collect monies owed. For more information, contact Frank, Frank, Goldstein and Nager.