NY Passes Consumer Credit Fairness Act; Reduces Statute of Limitations from 6 years to 3 years

[sheam]

https://www.nysenate.gov/newsroom/press-releases/kevin-thomas/governor-hochul-signs-consumer-credit-fairness-act-law

 

 

The Consumer Credit Fairness Act (CCFA) strengthens consumer protections in debt collection proceedings by: 

• Requiring a notice to be mailed to the defendants in consumer credit actions by the clerk of the court, ensuring that defendants are given notice of the lawsuit; 
• Requiring court filings to include more information about the debt targeted in a lawsuit, such as identifying the debt or account and providing proof that the debt is owed to the plaintiff;
• Lowering the statute of limitations for consumer credit transactions from six years to three years, compelling creditors to file claims in a timely manner and protecting consumers from excessive interest charges and late fees;
• Establishing specific requirements for applications for default judgments in consumer credit actions to prevent debt buyers from suing on expired debt.

[PhoenixDown]

Hmmmm so would this mean that a person could dispute an account that is more than 3  years old to get it off their reports? 

[Glacier]

The time frame where a creditor may seek legal remedies for a debt (varies by location) is different than the time frame for reporting, which is 7 years 6 months from the date the account first went delinquent, and never became current again.  

[sheam]

2 hours ago, PhoenixDown said:

Hmmmm so would this mean that a person could dispute an account that is more than 3  years old to get it off their reports? 

I don’t think so. It would still remain on reports for 5-7 years, but an action/lawsuit won’t be able to be brought against the debtor after 3 years from date of last activity**.
 

to be fair, I only looked at the highlights in the Press Release and haven’t checked the details…. 

**Regarding the DaTe of Last Activity, I think I saw something in the text of the bill that said new activity would NOT toll the period for bringing an action but I have to double check that when I get a chance because that seems inconsistent with most practice toward DOLA.

[sheam]

1 hour ago, Glacier said:

The time frame where a creditor may seek legal remedies for a debt (varies by location) is different than the time frame for reporting, which is 7 years 6 months from the date the account first went delinquent, and never became current again.  

Special note for NY regarding reporting: reporting period is 5 years (+6 mos) for satisfied/PAID debts (there may be some exceptions like tax delinquencies or bankruptcy, I just don’t have those details in front of me). 

[sheam]

34 minutes ago, sheam said:

Special note for NY regarding reporting: reporting period is 5 years (+6 mos) for satisfied/PAID debts (there may be some exceptions like tax delinquencies or bankruptcy, I just don’t have those details in front of me). 

Found it:

 

NY GEN BUS § 380-j. Prohibited information

 

(f)(1) Except as authorized under paragraph two of this subdivision, no consumer reporting agency may make any consumer report containing any of the following items of information.

(i) bankruptcies which, from date of adjudication of the most recent bankruptcy, antedate the report by more than fourteen years;

(ii) judgements which, from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period;  or judgments which, from date of entry, having been satisfied within a five year period from such entry date, shall be removed from the report five years after such entry date;

(iii) paid tax liens which, from date of payment, antedate the report by more than seven years or, a paid, satisfied or vacated tax lien involving a purchaser, transferee or assignee in a bulk sale transaction who has been deemed liable by the state tax commission for sales taxes due from a seller, transferrer or assignor under subdivision (c) of section eleven hundred forty-one of the tax law , where the receipt by a credit reporting agency from such purchaser, transferee or assignee of a notice, or true copy thereof, from the state tax commission to such purchaser, transferee or assignee that his liability has been wholly paid or satisfied or no longer exists, antedates the report by more than thirty days;

(iv) accounts placed for collection or charged to profit and loss which antedate the report by more than seven years;  or accounts placed for collection or charged to profit and loss, which have been paid and which antedate the report by more than five years;

(v) records of conviction of crime which, from date of disposition, release, or parole, antedate the report by more than seven years;

(vi) information regarding drug or alcoholic addiction where the last reported incident relating to such addiction antedates the consumer report or investigative consumer report by more than seven years;

(vii) information relating to past confinement in a mental institution where the date of last confinement antedates the report by more than seven years;  or

(viii) any other adverse information which antedates the report by more than seven years.

 

[centex]

On 11/18/2021 at 8:35 AM, PhoenixDown said:

Hmmmm so would this mean that a person could dispute an account that is more than 3  years old to get it off their reports? 

No.

 

And, a reduction of the expiry of limitations for litigation is not something that should be applied retroactively.

 

There exists a broader concern about the creation of a special class that gets disparate treatment from a Clerk.  I expect to see that struck down.  It is ALSO problematic that they are seeking to implement a requirement that wants more from a debt claim than is required on the four corners of any other pleading.  If not struck down, this is going to create a scenario where more entities go ahead and file suit far more rapidly than was occurring.  As with much 'consumer protection' legislation, this will NOT be consumer friendly. 

[PotO]

https://www.nysenate.gov/newsroom/press-releases/kevin-thomas/governor-hochul-signs-consumer-credit-fairness-act-law
 
 

The Consumer Credit Fairness Act (CCFA) strengthens consumer protections in debt collection proceedings by: 

• Requiring a notice to be mailed to the defendants in consumer credit actions by the clerk of the court, ensuring that defendants are given notice of the lawsuit; 
• Requiring court filings to include more information about the debt targeted in a lawsuit, such as identifying the debt or account and providing proof that the debt is owed to the plaintiff;
• Lowering the statute of limitations for consumer credit transactions from six years to three years, compelling creditors to file claims in a timely manner and protecting consumers from excessive interest charges and late fees;
• Establishing specific requirements for applications for default judgments in consumer credit actions to prevent debt buyers from suing on expired debt.

I wonder how long before other states follow?


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