On November 8, New York Governor Kathy Hochul signed into law the Consumer Credit Fairness Act (Act) (Legislation S.153/A.2382). The Act amends provisions of New York’s Civil Practice Law and Rules, commonly referred to as the CPLR, and the Judiciary Law to require original creditors and third-party debt collectors to include certain information and documents when filing and prosecuting debt collection actions. The Act also shortens the statute of limitations to file an action to enforce a debt from six years to just three years and makes it so a payment on the debt does not restart or revive the statute of limitations.
New Information and Document Requirements When Filing and Prosecuting a Debt Collection Action
The Act includes a bevy of new requirements tied to the filing and prosecution of debt collection actions. For example, a plaintiff in a debt collection action must attach the contract upon which the action is based — or the charge-off statement if the debt is for a revolving credit account — and the complaint must include the name of the original creditor, the last four digits of the account number, the date and amount of the last payment, and certain other information based on the type of account at issue.
The Act also requires the plaintiff in a debt collection action to provide a completed “additional notice of lawsuit” to the clerk when filing the proof of service for the complaint. The additional notice of lawsuit, which the clerk will then mail to the consumer defendant, must include the names of the plaintiff, the defendant, the original creditor, the index number for the case, and an English and Spanish translation of the defendant’s rights and responsibilities with respect to the lawsuit. A similar notice is required if a plaintiff files a motion for summary judgment.
If a third-party debt collector wishes to obtain a default judgment, the Act requires the debt collector to submit supporting affidavits from the original creditor, any prior assignors or sellers of the debt, and a witness for the collector who can verify the chain of title for the debt. All plaintiffs requesting a default judgment must also include an affidavit, stating that the statute of limitations to enforce the debt has not expired.
This portion of the Act will go in effect on May 6, 2022.
Statute of Limitations for Debt Collection Actions
Perhaps the most noteworthy provisions from the Act are those pertaining to the statute of limitations to file a debt collection action. Under the Act, the statute of limitations to file a debt is reduced from six years to three years. In addition, a consumer’s payment toward the debt or “written or oral affirmation” of ownership of the debt does not revive or extend the limitations period.
This portion of the Act will go in effect on April 6, 2022.