New York changes the way debt collectors do business
by Carol Thompson
New York State is cracking down on debt collection with new regulations that will require collectors to be more accountable.
The new state Department of Financial Services regulations are intended to prevent aggressive and deceptive practices by collectors, and take effect on March 3, with the exception of two regulations that require documentation of disclosure requirements and substantiation of debts. Those take effect on Aug. 30, 2015.
The tough new regulations could become a national model. Debt collector complaints are rampant in many states. New York receives approximately 20,000 such complaints each year.
The regulations are aimed at stopping harassment and abuse and hold debt collectors to a much higher standard.
In addition to allowing consumers the option of limiting their communication with debt collectors to email, the new rules also require debt collectors “substantiate” that the consumer actually owes the debt and inform the consumer if there is reasonable chance that the statute of limitations on the debt they are collecting has expired.
Next year, debt collectors will be required to disclose the following statement:
“We are required by regulation of the New York State Department of Financial Services to notify you of the following information. This information is NOT legal advice:
Your creditor or debt collector believes that the legal time limit (statute of limitations) for suing you to collect this debt may have expired. It is a violation of the Fair Debt Collection Practices Act, 15 U.S.C 1692 et seq., to sue to collect on a debt for which the statute of limitations has expired. However, if the creditor sues you to collect on this debt, you may be able to prevent the creditor from obtaining a judgment against you. To do so, you must tell the court that the statute of limitations has expired.
Even if the statute of limitations has expired, you may choose to make payments on the debt. However, be aware: if you make a payment on the debt, admit to owing the debt, promise to pay the debt, or waive the statute of limitations on the debt, the time period in which the debt is enforceable in court may start again.
If you would like to learn more about your legal rights and options, you can consult an attorney or a legal assistance or legal aid organization.”
Governor Andrew Cuomo said the new regulations will help to crack down on illegitimate debt collection practices.
“Here in New York we will not tolerate debt collectors who wrongfully take advantage of consumers,” Cuomo said when announcing the new rules. “That’s why we’re rolling out tough new regulations that protect borrowers and help crack down on illegitimate debt collection practices. These new tools and disclosures will protect New Yorkers across the state, and I am pleased that our administration is leading the way on this issue.”
Currently, consumers must dispute the debt in writing and request verification within 30 days of the first collection attempt. Under the new regulations, a consumer can request substantiation of the debt at any time during the collections process.
Some consumers do not understand the 30-day window and this rule change effectively expands it, state officials said. Once a debt collector receives a substantiation request, the debt collector must cease collection and provide documentation proving the validity of the debt and the creditor’s right to collect that debt within 60 days
Image: Flickr/Brennan Clark