NYC Debt Collection on the Merits

Photo of a clock on the wall to represent The courts have always preferred NYC debt collection on the merits.The courts have always preferred NYC debt collection cases be heard on the merits. That’s to say that everyone should have their day in court. Now, after a partial shutdown, we find New York city courts taking it a step further, potentially overreaching a bit, to give debtors and their counsel an opportunity to have their case heard on the merits. Processes and procedures in New York City courts operate under a set of rules. New York Civil Practice Law and Rules provide a timeline under which parties to New York City debt collection litigation must operate within. Judges enforce the time frames set forth in the rules and can grant extensions and certain modifications as they see fit.

Normally a debtor has 20 to 30 days to answer a summons and complaint. If they fail to answer within the time period, and a few other conditions are met, they are considered in default. If the summons and complaint was drafted in such a way, then the creditor’s attorney can submit a judgment on default.

Typically the debtor in default needs to prove they had an excusable reason for not answering within the 20 to 30 days and a meritorious defense. Recently, we have found the courts a bit more lenient on defaulting debtors who cite COVID-19 as their reason for not answering, with courts vacating the defendant’s defaults more often.

And, in cases where courts would push to move through to resolution, law clerks and judges are allowing parties to ask for more discovery, even though the deadline might have passed more than several months back.

Presumably, the extensions and allowances being made are to allow cases to be heard on the merits during a pandemic. However, the parties involved are not necessarily required to allege a shutdown or failure to access their computer or office or to counsel as an excuse for failing to respond to a summons or complaint or failure to conduct discovery in a timely matter.

The lawyers may say, “but judge, it’s Covid,” and that alone is sometimes enough for the judge to say, “default vacated” or “extension granted.” But, not to be confused with being bulldozed, the Court will not allow unlimited extensions and delay. They too are on a deadline and are required to resolve a specific number of cases per year.

Creditor’s attorneys must be prepared for the on the merits approach, reminding their adversaries of the rules, and requesting to be ”heard on the record.” If the court oversteps, an appeal may be possible.

And let’s not forget the judgment clerks. In some counties, judgment clerks will not allow a judgment creditor to add interest for part of the teh shutdown period in their judgment. This gives an advantage to the debtor, perhaps their own way of allowing the case to be heard on the merits.

If you have a debt collection matter you need assistance with, contact Frank, Frank, Goldstein and Nager for a consultation. We have the experience that pays.