What is the NYS Consumer Credit Fairness Act?

If you live in New York and are currently fighting lenders about your consumer debt (like credit cards and car loans), the State recently passed a law you need to know about.

The Consumer Credit Fairness Act

The New York State Senate passed into law the Consumer Credit Fairness Act (Assembly Bill A2382). The impetus behind this new law was the growing problem of abusive debt collection practices, usually by third- or fourth-party collection agencies. These agencies would try to collect on debts that had been already paid, that had passed the statute of limitations, or had been the result of identity fraud.

Here’s what you need to know.

New, Shorter Statute of Limitations

Previously, the statute of limitations (how long you can be held responsible for something) on consumer debt was six years. That meant that lenders and creditors had six years to try and collect any money you owed them. As of April 7, 2022, the Consumer Credit Fairness Act changed the statute of limitations to three years. Another big change here is that, prior to this new law, if you paid a bit of what you owed, the statute of limitations would start again from the time you paid. This law forbids your creditors from doing that and makes extending your limitation period illegal. If you are currently dealing with a collection agency, talk with a credit attorney about this new statute of limitations reduction, even if your case started before the Consumer Credit Fairness Act went into effect.

Stronger Debt History Required

The lender you borrowed money from may have sold your debt to another entity – in fact, it may have been sold several times. This becomes a problem in trying to figure out who owes how much to whom since when. Starting May 7, 2022, the Consumer Credit Fairness Act now mandates that anyone trying to collect on a debt needs to show:

• Who the original creditor was
• When the original debt occurred
• The date the debt was in default
• Details of how much was originally borrowed, how much was paid, what the interest rates were, and any additional costs that applied
• Details of everyone who the debt was transferred or sold to
• Proof that the debt is still within the statute of limitation

If any of this information is missing, your credit lawyer will be able to get the case against you dismissed.

Better Noticing System

Previously, lenders just had to send you a notice letter telling you that you were in default on your loan and they were taking you to court. This changes as of May 7, 2022. Now, even before they go to the courts, lenders also have to send you a separate letter called the Additional Notice of Lawsuit. But they can’t send it to you directly. They have to print out the letter (in the exact language of the Consumer Credit Fairness Act, in 12-point type, and in English and Spanish) and give it, and an empty envelope with your legal address on it, to the court clerk who will then mail it to you. If your creditors skip a single step here or don’t use the required language, your credit lawyer will be able to fight back.

How This Law Can Affect Your Current Case

The Consumer Credit Fairness Act gives your credit lawyer a new toolbox to protect you from these scam artists, as well as from overzealous legitimate creditors.

The agency holding your debt now needs to show the entire history of your loan, from the day you borrowed through every time it changed hands. Not having been mandated before, many collection agencies won’t have all these records available. They are also no longer able to reset the statute of limitations if you do a partial payment on the loan. And they also have to make sure they send you all the information about your loan, how much you owe, and the various options you have to fight the claim. If at any point the collection agency does not comply with the new regulations, your credit lawyer will be able to get their existing claim dismissed.

For additional information, click here to read the notice the NY Attorney General sent to Debt Collectors Operating in New York State.

What to Do Next

Even if you are currently in litigation with a collection agency, the Consumer Credit Fairness Act may give your credit lawyer the ability to litigate or negotiate the end of your consumer credit case. For a free consultation, reach out to New York credit attorney Ronald D. Weiss, P.C. He can tell you what you need to know about consumer credit law in New York and help you get your case started. Call 631-271-3737 and take the first step to a fresh start.