On April 30, 2014, New York State’s chief judge, Jonathan Lippman, announced that he would institute new court rules and protocols aimed at the issue of obtaining default judgments against debtors. These rules offer more protection to debtors.
In a speech, the judge claimed that many debtors are never served papers and only learn a judgment has been entered against them when their bank accounts are frozen or their wages are garnished. The major problems outlined by the judge include the supposed lack of proper service and lack of documentation on the part of the debt collector. Because many debts have been bought and sold multiple times in the secondary marketplace, the judge asserted that debt collectors often cannot back up the claimed debt with evidence of the debt’s origin, history, and amount.
The new rules would require debt collectors to submit documents detailing the chain of ownership of the debt as well as affidavits from individuals with personal knowledge of the debt. The state administrative board of the courts, which is led by Judge Lippman, has approved the new rules and published them for public comment. The new rules should go into effect on June 15, 2014.
Debt collectors in New York should keep an eye on these new regulations when filing collection actions in New York.