Creditors and debt collectors in New York are guided by regulations stipulated in federal laws as well as New York’s own debt collection state laws. As a debtor, you have to familiarize yourself with these laws to know your rights and learn how to avoid collections.
Debt collection can be both embarrassing and stressful, especially if it causes you to lose your valuable possessions. But with the knowledge of New York debt collection laws, you can protect yourself. Luckily, by working with a New York credit repair company like The Phenix Group, you don’t have to navigate debt collections alone.
Main Debt Collection Laws in New York
New York has one of the strongest anti-harassment protection laws in the United States–the New York City Consumer Protection Law–which is designed to protect debtors against unwarranted harassment by creditors, debt buyers, and debt collectors.
In 2009, the state passed Local Law 15, which offered the residents more protection against debt collectors. This law expanded the authority of the Department of Consumer Affairs (DCA), which licenses and regulates debt collectors.
The new law covers debt buyers, which are companies that buy late debts from creditors. Sometimes, debt buyers employ punitive tactics to recover overdue debts, including taking debtors to court.
Thankfully, the new law protects consumers against this harassment, ensuring that debtors are treated with respect during debt recovery. The latest DCA law includes updated information about the rights of debtors and the responsibilities of debt collectors (including debt buyers) when recovering debt.
As a debtor, you need to know your rights so that you can protect yourself against undue harassment. This way, you can make it clear to the debt collectors that you’re fully aware of your rights.
Here are the latest provisions of the DCA in New York:
Debt Collectors Can’t Collect on Payday Loans
First of all, payday loans are unlawful in New York. So, many creditors and debt collectors in the state handle payday loans on the phone and the Internet. Because the state has prohibited this loan, you should report any debt collector who attempts to collect on a payday loan to 311 or on nyc.gov/dca.
Debt Collectors Cannot Use Caller ID Spoofing
The law prohibits debt collectors in New York from using spoofed (faked) phone numbers disguising themselves as other important callers. For instance, some debt collectors disguise their numbers on your caller ID as a government agency or your relative so that you pick up their call.
If you receive a spoofed call from your creditor or debt collector, you should file a complaint with the DCA. The DCA also warns about debt collectors (and other companies working with debt collectors) that will offer you a credit card when you repay your loan in full or in part.
Such companies use enticing terms like ‘A Fresh Start Program’ or ‘A Balance Transfer Program.’ They’ll encourage you to take advantage of the program to transfer your debt to the new credit card.
Unfortunately, this causes the debt collector’s time limit (statute of limitations) to take you to court to start anew. This means they can continue to harass you about a debt for longer.
Understand the Statute of Limitations for Debt Collection in New York
In 2021, the state of New York passed a law setting the time limit for debt collectors to sue you for late payment of your debt. This law sets a limit of three years, which implies that a debt collector has to sue you for overdue debt within three years.
Previously, the statute of limitations was six years, which gave debt collectors ample time to harass debtors. The new law requires the debt collector to mail a written notice through the clerk of the court and ensure that you’re duly notified of the lawsuit.
Debtors Cannot Inform Your Employer About Your Debt
The new law prohibits your creditor and debt collector from notifying your employer or relative of your debts before they obtain a court judgment against you. So, you can file a complaint against your debt collector if they send emails or call your employer notifying them about your overdue debts.
Debt Collectors Cannot Threaten to Take Illegal Action
If your debt collector or creditor threatens to take illegal action against you, you have a right to file a complaint against them. For instance, if the debt collector threatens to collect a higher fee than what you owe or threatens to cause you physical or emotional harm, you should contact the DCA immediately.
You should also file a complaint with the DCA if the debt collector calls your relatives incessantly or at abnormal hours which amounts to debt collection harassment.
Protect Yourself With Credit Repair
You can avoid the stress of dealing with inhumane debt collectors by repairing your debt. Work with a reputable and well-established New York credit repair firm like The Phoenix Group to repair your credit today!