Assembly Speaker Sheldon Silver, Consumer Affairs Committee Chair Jeffrey Dinowitz and Judiciary Committee Chair Helene Weinstein announced today the passage of a legislative package intended to ensure greater fairness in the debt collection process by informing debtors of their rights, enacting the Consumer Credit Fairness Act and curbing abusive debt collection practices.

"New Yorkers working their way out of debt often find themselves vulnerable to misleading and sometimes hostile debt collection practices," Speaker Silver said. "Debt collectors have no right to take advantage of the very consumers they are supposed to be helping. The Assembly is committed to doing whatever we can to ensure that if a person is doing their part to get out of debt and get their finances in order, they will be protected from debt collector abuse, treated fairly and have the necessary information and resources readily available and easy to understand."

In order to help reduce abusive debt collection practices, consumers should be informed of the limitations placed on debt collectors by New York law. The requirement that debtors receive information on "Consumers Rights" is established by one of the measures in the legislative package. Under this measure, debt collectors would send consumers a written notice making mention of consumers' rights under federal law and New York's debt collection practices law in each initial debt collection correspondence (A.606, Dinowitz).

"While consumers should certainly be held accountable for the debt they've incurred, there is simply no excuse for the dishonest practices that so many debt collectors engage in," Dinowitz said. "New Yorkers working their way to stable financial ground shouldn't be subjected to such deceptive and oftentimes fraudulent debt collection practices. Today's package of legislation enforces strict boundaries on debt collectors, protects consumers and helps ensure debtors are kept adequately informed of their rights and responsibilities in a fair and just manner."

An additional measure would establish the Consumer Credit Fairness Act. This program bill from Attorney General Eric Schneiderman would reform debt lawsuits concerning consumer debt (A.9053, Weinstein). The Act would codify and amplify the recent court rules proposed by Chief Judge Jonathan Lippman for default judgments. Additionally, the act would:

• require notice of a pending consumer credit action to be mailed to the defendants by the clerk of the court;
• require court filings to include specific information about the debt, such as the contract and a chain of title for the debt;
• make a uniform three-year statute of limitations for consumer debt and eliminate the right to collect the debt once the statute of limitations expires; and
• require debt buyers to plead that a suit is within the statute of limitations.

"Currently, the state justice system is being flooded with aggressive debt collection lawsuits brought against middle and low income New Yorkers, who oftentimes are entirely unaware such a lawsuit is being filed against them," Weinstein said. "The Consumer Credit Fairness Act is a necessary measure that will close existing gaps in our state laws and will hopefully stem the flow of predatory debt collection practices and lawsuits. The legislation makes common sense fixes that consumers deserve and need throughout the debt collection process."

An additional bill would help align New York State's current laws with the federal Fair Debt Collection Practices Act (A.596, Dinowitz). Among other provisions this measure would:

• provide that creditors and debt collectors may only communicate with debtors between the hours of 8 a.m. and 9 p.m. local time;
• require creditors and debt collectors to send a notice to the last known address of a debtor advising the debtor when his or her debt is being sold or transferred;
• oversee how debt collectors may communicate with any person other than the consumer for the purposes of acquiring location information about the consumer in order to collect a debt; and
• manage how debt collectors may communicate with a consumer once debt collection procedures commence.

Several other significant measures in the legislative package help consumers reduce their debt and work to limit abusive debt collection practices by:

• offering some protection to debtors who suffer from vision problems by requiring debt collectors to inform debtors that written communications are available in large print format (A.374, Dinowitz);
• creating a private right of action and imposing fines for improper debt collection procedures (A.6654, Simotas);
• prohibiting debt collectors from collecting or attempting to collect a debt owed by a deceased debtor from a person known to be not legally required to pay such debt (A.218A, Rosenthal); and
• requiring third party debt collectors and debt buyers to obtain a license from the Department of State (A.455A, Dinowitz).