Are you owed money by a business or an individual residing in the state of New York? If so, you should know the statute of limitations for debt collection, how long you have to collect your claim under New York state law.
Like many things, debt collection claims can go stale. Once the time to pursue collection expires, attempting to collect can be unwise, unlawful, or just bad business. This may be the case whether you’re considering demand, mediation, arbitration, or litigation.
Statute of Limitations in New York
The length of time you have to pursue a claim is referred to as the “statute of limitations.” The amount of time varies based on the type of debt.
Business-to-business (B2B) claims for services rendered: 6 years
Claims for goods sold: 4 years, under the Uniform Commercial Code (UCC)
Consumer debts: 3 years, recently shortened from 6 years
Even if the statute of limitations has expired for mediation, arbitration, or litigation, you may still make a demand for payment. However, there are important differences depending on the type of debt.
- For commercial debts past statute: You are not required to inform the business that the debt is stale or past the statute of limitations. You can still send demand letters or make calls.
- For consumer debts past statute: You must clearly advise the consumer that the debt is past the statute of limitations. Additionally, debt collectors cannot threaten litigation against a consumer for debts past the statute.
Legal Risks of Collecting Past Statute
Although you can place a debt that is stale for debt collection, going beyond demand and into mediation, arbitration, or litigation is a very bad idea.
In consumer cases, a lawyer must specifically affirm that the debt is within the permitted time period. If it’s not, the consumer has a valid defense. Attempting to collect through the courts would then expose the debt collector to legal consequences since they would be in violation of federal and state law.
In commercial cases, you can still make a demand without disclosure. However, if a suit is filed on a debt that’s past the statute of limitations, the defendant also has an absolute defense. Even if the commercial defendant fails to respond and defaults, the attorney filing the case must submit an affirmation to the court confirming the debt is timely and within the statute of limitations.
If your debt collection attorney accepts a stale claim, which is highly unlikely, they can still encourage the debtor to pay through demand letters or phone calls as long as they do so within lawful parameters. However, they cannot threaten litigation once the statute of limitations has expired.
When calculating whether your claim is still within the statute of limitations, be aware that:
A partial payment on the debt can restart the statute.
A written acknowledgment of the debt may also extend the timeline.
Have questions about debt collection? Contact Frank, Frank, Goldstein and Nager by email or call +1 (212) 686-0100. We have the experience that pays.
