To enforce your rights to get paid, you filed a New York debt collection case. It’s only when the debtor (now defendant) defends the case that you learn you failed to comply with a local law or ordinance. What are the penalties for debt collection non-compliance? Does the fact that you failed to comply mean you aren’t entitled to payment? The answer depends.
A general denial will stall litigation and recovery but won’t act as a bar. A more substantive answer will include affirmative defenses. Affirmative defenses set forth a” legal reason” why the defendant should defeat your debt collection cases causing you to lose your chance to get paid.
Although the debtor uses the defenses, it does not necessarily mean that they are valid or that they apply to the case. It is your debt collection attorney’s job to illustrate to the court that the defenses do not apply. Even if the defenses apply, they should not completely bar you from recovering the monies owed to you.
The following are some defenses that can completely bar recovery.
Failure To Comply With a Local Licensing Requirement
Nassau County in New York requires contractors to maintain a valid Nassau County Home Improvement Contractor’s License.
In this example, a contractor who fails to comply with the licensing requirement (even by accident or oversight) will not be able to enforce their right to get paid in a court action or by way of alternative dispute resolution (mediation or arbitration) for home improvement work performed in the county.
Statute of Limitations
The statute of limitations is another example of a defense that is a complete bar to recovery.
A creditor who brings an action later than the law allows will lose their case. It is the job of the debt collection attorney to illustrate to the court that conditions were met to “toll” or extend the statute of limitations. If no conditions apply, then the creditor’s case will be dismissed as a matter of law and they will not be entitled to recovery.
Take, for example, a case where a service provider filed a debt collection case exactly six years from the date of their invoice for payment. The creditor used the date of their invoice rather than the date the service was rendered which was six years and one month. In this scenario, the creditor would be out of luck as the clock began from the date the service was rendered, not the date of the invoice. Since none of the conditions applied to extend the statute of limitations, the creditor’s claim for payment would fail.
However, some acts of non-compliance still allow the creditor to proceed with their debt collection case.
Defenses That Do Not Bar Recovery
A defense that does not completely bar recovery is that the creditor is not authorized to do business in the state. Based on the percentage of revenue derived from doing business in New York, the debt collection attorney will distinguish between doing business and transacting business. Meaning that this defense would not necessarily ensure the creditor’s claim for recovery will fail.
Unclean Hands
Another affirmative defense that can be asserted by a debtor or defendant is the doctrine of unclean hands. This is a defense that may mitigate the creditor’s recovery but should not bar full recovery of monies due and owing to the creditor.
A savvy collection attorney will guide you through the process, and advise you regarding the viability of your claim before and as you proceed with your case. If you need debt collection assistance, contact Frank, Frank, Goldstein and Nager.
