A04438 Summary:
BILL NO | A04438 |
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SAME AS | No Same As |
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SPONSOR | Weinstein |
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COSPNSR | Jaffee, Titone, Colton, Galef, Abinanti, Zebrowski, O'Donnell, Crespo, Rosenthal, Fahy, Robinson, Peoples-Stokes, Miller, Dinowitz, Weprin, Bronson |
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MLTSPNSR | Brennan, Cook, Cymbrowitz, Davila, Glick, Gottfried, Markey, Otis, Perry, Schimel, Solages |
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Amd SS213, 3012 & 3215, RR3016 & 3211, add SS214-f, 306-d & 7515, CPLR | |
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Enacts the "consumer credit fairness act"; establishes a 3 year statute of limitations for commencement of a cause of action arising out of a consumer credit transaction where the defendant is a purchaser, borrower or debtor; establishes a notice of lawsuit which must be mailed to the defendant in such a cause of action; establishes certain requirements for the complaint in such an action; provides for arbitration of such actions; requires debt collectors to send consumers a written notice of their rights under state law along with their initial debt collection correspondence; such notice would contain information such as who and when a principal creditor may contact a debtor about the debt owed as well as the fact that a principal creditor cannot disclose information affecting a consumer debtor's reputation for creditworthiness if the principal creditor knows or has reason to know such information is false; applies to consumer rather than commercial debts. |
A04438 Actions:
BILL NO | A04438 | |||||||||||||||||||||||||||||||||||||||||||||||||
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01/30/2015 | referred to judiciary | |||||||||||||||||||||||||||||||||||||||||||||||||
03/24/2015 | reported referred to codes | |||||||||||||||||||||||||||||||||||||||||||||||||
04/22/2015 | reported | |||||||||||||||||||||||||||||||||||||||||||||||||
04/23/2015 | advanced to third reading cal.195 | |||||||||||||||||||||||||||||||||||||||||||||||||
01/06/2016 | referred to judiciary |
A04438 Memo:
Go to topNEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)   BILL NUMBER: A4438 SPONSOR: Weinstein (MS)
  TITLE OF BILL: An act to amend the civil practice law and rules, in relation to consum- er credit transactions   PURPOSE OF BILL: This bill would strengthen consumer protections in consumer debt collection proceedings.   SUMMARY OF PROVISIONS OF BILL: The bill would require that the complaint in consumer credit actions provide the name of the original creditor, the last four digits of the original account number, the date and amount of the last payment, a chain of title of the account, and a breakdown of the amount that the plaintiff seeks to collect. The bill also requires that a copy of the contract be attached to the complaint. The bill would reduce the statute of limitations on consumer credit actions from six years to three years. The bill would also bar debt collectors from collecting debts on which the statute of limitations has expired. It would require that an additional notice of a pending consumer credit action be mailed to the defendant by the clerk of the court. This is required in New York City and the bill would adopt this requirement statewide. The bill would permit defendants in consumer credit actions to raise improper service as a defense in their answer and preserve that defense for trial without having to file a separate motion to dismiss within 60 days as under current law. To prevent the entry of default judgments on claims which have no merit, the bill would require applications for default judgments in consumer credit actions to include specific pleading requirements. These include (1) an affidavit by the original creditor of the facts constituting the debt, the default in payment, the sale or assignment of the debt, and the amount due at the time of sale or assignment; (2) for each subse- quent assignment or sale of the debt to another entity, an affidavit of sale of the debt by the debt seller, completed by the seller or assig- nor; and (3) an affidavit of a witness of the plaintiff, which includes a chain of title of the debt, completed by the plaintiff or plaintiffs witness. The bill will also require that applications for default judg- ments in consumer credit actions include a statement that after reason- able inquiry, the creditor has reason to believe that the statute of limitations has not expired.   JUSTIFICATION: There have been serious concerns reported about the growing problem of abusive debt collection practices including filing suit on debts that are too old to be sued on, are a result of identity theft or are debts that have been paid or otherwise discharged. Other reported concerns include lack of notice to the defendant of the law suit resulting in a default judgment against the defendant without a requirement to produce proof of the debt sued on. Abusive debt collection lawsuits exploit current gaps in our state's civil procedure laws and rules. The proposed legislation helps to fill those gaps. In doing so, this legislation will protect all consumers, and will particularly help ameliorate some of the forms of economic abuse, including identity theft, suffered by domestic violence victims at the hands of their abusers. At a hearing on economic abuse as a form of domestic abuse, held on December 5, 2012, by the New York State Assembly Committees on Judiciary and Codes, civil legal service providers, domestic violence prevention advocates and the Office of Court Administration highlighted the insid- ious and pervasive nature of various forms of economic abuse perpetrated by abusers in the family violence context to exercise power and control over their victims and their finances. The types of abuse cited included incurring debt in the survivor's name through false statements or coercion, perpetrating identity theft or otherwise incurring debt without the survivor's knowledge. Witnesses at the hearing cited this legislation as important and helpful to ameliorating economic abuse suffered by domestic abuse survivors. This legislation requires statewide institution of additional notice requirements that are presently in place in New York City. There is a significant and documented problem with faulty service that results in default judgments with serious life-altering ramifications. Without notice, defendants do not appear in court, and debt buyers easily obtain default judgments. These judgments are enforced by freezing people's bank accounts and garnishing their wages, hampering their ability to then pay for basic necessities such as food, utilities, medication and housing. These judgments appear on people's credit reports, making it close to impossible for them to secure housing or employment, or to take out a loan. The provisions of this bill would protect all consumers and domestic abuse survivors in particular, by ensuring that New Yorker's receive actual notice of debt collection actions. To ensure that default judgment applications in debt collection lawsuits are evaluated on the merits, this bill also requires court papers to include more information about the debt sued upon. This would ensure that all New Yorkers will be better able to identify the debt or account on which they are being sued. There are many debts that result from identity theft or mistaken identity and, in other situations, the defendant may not recognize the debt as theirs from the minimal informa- tion provided on the initial filing of legal papers and may therefore not respond. We learned from the hearing on economic abuse as a form of domestic abuse, that this legislation will be particularly important for domestic violence survivors as it will help them identify the debt and assert defenses in cases involving debts they did not voluntarily incur but that were incurred by their abusers in the survivor's name. This legislation will reduce the statute of limitations for consumer credit actions from six to three years. Reducing the statute of limita- tions requires creditors to file their claims while memories are fresh and records are, still available. States with three year statutes of limitation include: Arizona, Arkansas, Delaware, Kansas, Louisiana, Maryland, Mississippi, Montana, and the District of Columbia. Pennsylva- nia has a two-year statute of limitation. In response to the now common practice of selling time-barred debt this bill would also extinguish the right to collect the debt after the statute of limitation has expired. States with similar requirements include Wisconsin and Mississippi. Debt collection actions are rife with poor service and default judgments that are obtained after the statute of limitations have expired. To address this problem, the bill will require that application's for default judg- ments in consumer credit actions include a statement that the creditor has reason to believe that the statute of limitations has not expired and it will protect defendants from unknowingly waiving the legitimate defense that a debt is past the statute of limitations or that they were improperly served. This legislation will benefit all consumers and for domestic violence survivors, it will go a long way toward helping break the perfect cycle of violence and domestic abuse that enables perpetrators of domestic abuse to exercise control over their victims and their finances in a manner that prevents the victim from leaving a dangerous relationship or forces them to return to it.   LEGISLATIVE HISTORY: 2013-14: Similar to A.9053/S.2454 - Passed Assembly/S. Judiciary 2011-12: Similar to A.633/S.677-A - Assembly Calendar/S. Judiciary 2010; A.7558-A/S.4398-A - Passed Assembly/S. Finance 2009; A.7558-A/S.439S-A - Passed Assembly/S. Codes   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: None.   EFFECTIVE DATE: January 1, after becoming law. Section three of the bill, which shortens the statute of limitations, will take effect 150 days after becoming law.
A04438 Text:
Go to top STATE OF NEW YORK ________________________________________________________________________ 4438 2015-2016 Regular Sessions IN ASSEMBLY January 30, 2015 ___________ Introduced by M. of A. WEINSTEIN, JAFFEE, TITONE, COLTON, GALEF, ABINAN- TI, ZEBROWSKI, O'DONNELL, CRESPO, ROSENTHAL, SCARBOROUGH, FAHY, ROBIN- SON, PEOPLES-STOKES, MILLER -- Multi-Sponsored by -- M. of A. BRENNAN, COOK, CYMBROWITZ, DAVILA, GLICK, GOTTFRIED, MARKEY, OTIS, PERRY, SCHI- MEL, SOLAGES -- (at request of the Department of Law) -- read once and referred to the Committee on Judiciary AN ACT to amend the civil practice law and rules, in relation to consum- er credit transactions The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Short title. This act shall be known and may be cited as 2 the "consumer credit fairness act". 3 § 2. Subdivision 2 of section 213 of the civil practice law and rules, 4 as amended by chapter 709 of the laws of 1988, is amended to read as 5 follows: 6 2. an action upon a contractual obligation or liability, express or 7 implied, except as provided in section two hundred thirteen-a or two 8 hundred fourteen-f of this article or article 2 of the uniform commer- 9 cial code or article 36-B of the general business law; 10 § 3. The civil practice law and rules is amended by adding a new 11 section 214-f to read as follows: 12 § 214-f. Certain actions arising out of consumer credit transactions 13 to be commenced within three years. An action arising out of a consumer 14 credit transaction where a purchaser, borrower or debtor is a defendant 15 must be commenced within three years, except as provided in section two 16 hundred thirteen-a of this article or article 2 of the uniform commer- 17 cial code or article 36-B of the general business law. When the period 18 within which an action may be commenced under this section has expired, 19 the right to collect consumer credit debt is extinguished as well as the 20 remedy. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD00082-04-5A. 4438 2 1 For purposes of this section, "the right to collect consumer credit 2 debt" shall mean any attempts by the creditor, third party purchaser, or 3 other authorized third party to collect such debt including, but not 4 limited to, calls, mail or other attempts to collect. 5 § 4. The civil practice law and rules is amended by adding a new 6 section 306-d to read as follows: 7 § 306-d. Additional mailing of notice in an action arising out of a 8 consumer credit transaction. (a) At the time of filing with the clerk of 9 the proof of service of the summons and complaint in an action arising 10 out of a consumer credit transaction, the plaintiff shall submit to the 11 clerk a stamped unsealed envelope addressed to the defendant together 12 with a written notice in clear type of no less than twelve-point in 13 size, in both English and Spanish, and containing the following 14 language: 15 ADDITIONAL NOTICE OF LAWSUIT 16 (NAME OF COURT) 17 (COUNTY) 18 (STREET ADDRESS, ROOM NUMBER) 19 (CITY, STATE, ZIP CODE) 20 (NAME OF DEFENDANT) 21 (ADDRESS OF DEFENDANT) 22 Plaintiff:__________________________________ 23 Defendant:__________________________________ 24 Name of original creditor, unless same:______________________________ 25 Index number:_______________________________ 26 Attention: a lawsuit has been filed against you claiming that you owe 27 money for an unpaid consumer debt. 28 You should go to the court clerk's office at the above address as soon 29 as possible to respond to the lawsuit. You may wish to contact an attor- 30 ney. 31 If you do not respond to the lawsuit, the court may enter a money judg- 32 ment against you. Once entered, a judgment is good and can be used 33 against you for twenty years, and your personal property and money, 34 including a portion of your paycheck and/or bank account, may be taken 35 from you. Also, a judgment will affect your credit score and can affect 36 your ability to rent a home, find a job, or take out a loan. 37 You CANNOT be arrested or sent to jail for owing a debt. 38 It is important that you go to the court clerk's office listed above as 39 soon as possible. You should bring this notice and any legal papers you 40 may have received. Additional information can be found at the court 41 system website at: www.nycourts.gov 42 (b) The face of the envelope shall be addressed to the defendant at 43 the address at which process was served, and shall contain the defend- 44 ant's name, address (including apartment number) and zip code. The face 45 of the envelope also shall state the appropriate clerk's office as its 46 return address. 47 (c) The clerk promptly shall mail to the defendant the envelope 48 containing the additional notice set forth in subdivision (a) of this 49 section. No default judgment based on the defendant's failure to answer 50 shall be entered unless there has been compliance with this section, and 51 at least twenty days have elapsed from the date of mailing by the clerk. 52 No default judgment based on the defendant's failure to answer shall beA. 4438 3 1 entered if the additional notice is returned to the court as undelivera- 2 ble. Receipt of the additional notice by the defendant does not confer 3 jurisdiction on the court in the absence of proper service of process. 4 § 5. Subdivision (a) of section 3012 of the civil practice law and 5 rules is amended to read as follows: 6 (a) Service of pleadings. The complaint may be served with the 7 summons, except that in an action arising out of a consumer credit tran- 8 saction, the complaint shall be served with the summons. A subsequent 9 pleading asserting new or additional claims for relief shall be served 10 upon a party who has not appeared in the manner provided for service of 11 a summons. In any other case, a pleading shall be served in the manner 12 provided for service of papers generally. Service of an answer or reply 13 shall be made within twenty days after service of the pleading to which 14 it responds. 15 § 6. Rule 3016 of the civil practice law and rules is amended by 16 adding a new subdivision (i) to read as follows: 17 (i) Consumer credit transactions. In an action arising out of a 18 consumer credit transaction where a purchaser, borrower or debtor is a 19 defendant, the contract or other written instrument on which the action 20 is based shall be attached to the complaint and the following informa- 21 tion shall be set forth in the complaint: 22 1. The name of the original creditor; 23 2. The last four digits of the original account number; 24 3. The date and amount of the last payment; 25 4. If the complaint contains a cause of action based on an account 26 stated, the date that the final statement of account was mailed to the 27 defendant; 28 5. An itemization of the amount sought, by (i) principal; (ii) finance 29 charge or charges; (iii) fees imposed by the original creditor; (iv) 30 collection costs; (v) attorney's fees; (vi) interest; and (vii) any 31 other fees and charges. The term "finance charge" means a finance charge 32 as defined in Regulation Z, 12 C.F.R. § 226.4. 33 6. Whether the plaintiff is the original creditor. If the plaintiff is 34 not the original creditor, the complaint shall also state (i) the date 35 on which the debt was sold or assigned to the plaintiff; (ii) the name 36 of each previous owner of the account and the date on which the debt was 37 assigned to that owner; and (iii) the amount due at the time of the sale 38 or assignment of the debt by the original creditor. 39 7. Any matters required to be stated with particularity pursuant to 40 rule 3015 of this article. 41 § 7. Subdivision (e) of rule 3211 of the civil practice law and rules, 42 as amended by chapter 616 of the laws of 2005, is amended to read as 43 follows: 44 (e) Number, time and waiver of objections; motion to plead over. At 45 any time before service of the responsive pleading is required, a party 46 may move on one or more of the grounds set forth in subdivision (a) of 47 this rule, and no more than one such motion shall be permitted. Any 48 objection or defense based upon a ground set forth in paragraphs one, 49 three, four, five and six of subdivision (a) of this rule is waived 50 unless raised either by such motion or in the responsive pleading. A 51 motion based upon a ground specified in paragraph two, seven or ten of 52 subdivision (a) of this rule may be made at any subsequent time or in a 53 later pleading, if one is permitted; in any action other than an action 54 arising out of a consumer credit transaction where a purchaser, borrower 55 or debtor is a defendant, an objection that the summons and complaint, 56 summons with notice, or notice of petition and petition was not properlyA. 4438 4 1 served is waived if, having raised such an objection in a pleading, the 2 objecting party does not move for judgment on that ground within sixty 3 days after serving the pleading, unless the court extends the time upon 4 the ground of undue hardship. The foregoing sentence shall not apply in 5 any proceeding under subdivision one or two of section seven hundred 6 eleven of the real property actions and proceedings law. The papers in 7 opposition to a motion based on improper service shall contain a copy of 8 the proof of service, whether or not previously filed. An objection 9 based upon a ground specified in paragraph eight or nine of subdivision 10 (a) of this rule is waived if a party moves on any of the grounds set 11 forth in subdivision (a) of this rule without raising such objection or 12 if, having made no objection under subdivision (a) of this rule, he or 13 she does not raise such objection in the responsive pleading. 14 § 8. Subdivision (f) of section 3215 of the civil practice law and 15 rules, as amended by chapter 453 of the laws of 2006, is amended and a 16 new subdivision (j) is added to read as follows: 17 (f) Proof. On any application for judgment by default, the applicant 18 shall file proof of service of the summons and the complaint, or a 19 summons and notice served pursuant to subdivision (b) of rule 305 or 20 subdivision (a) of rule 316 of this chapter, and proof of the facts 21 constituting the claim, the default and the amount due by affidavit made 22 by the party, or where the state of New York is the plaintiff, by affi- 23 davit made by an attorney from the office of the attorney general who 24 has or obtains knowledge of such facts through review of state records 25 or otherwise. Where a verified complaint has been served, it may be used 26 as the affidavit of the facts constituting the claim and the amount due; 27 in such case, an affidavit as to the default shall be made by the party 28 or the party's attorney. In an action arising out of a consumer credit 29 transaction, if the plaintiff is not the original creditor, the appli- 30 cant shall include: (1) an affidavit by the original creditor of the 31 facts constituting the debt, the default in payment, the sale or assign- 32 ment of the debt, and the amount due at the time of sale or assignment; 33 (2) for each subsequent assignment or sale of the debt to another enti- 34 ty, an affidavit of sale of the debt by the debt seller, completed by 35 the seller or assignor; and (3) an affidavit of a witness of the plain- 36 tiff, which includes a chain of title of the debt, completed by the 37 plaintiff or plaintiff's witness. When jurisdiction is based on an 38 attachment of property, the affidavit must state that an order of 39 attachment granted in the action has been levied on the property of the 40 defendant, describe the property and state its value. Proof of mailing 41 the notice required by subdivision (g) of this section, where applica- 42 ble, shall also be filed. 43 (j) A request for a default judgment entered by the clerk, must be 44 accompanied by an affidavit by the debt collector (who may be the plain- 45 tiff or plaintiff's attorney) stating that after reasonable inquiry, he 46 or she has reason to believe that the statute of limitations has not 47 expired. 48 § 9. The civil practice law and rules is amended by adding a new 49 section 7515 to read as follows: 50 § 7515. Confirmation of an award based on a consumer credit trans- 51 action. In any proceeding under section 7510 of this article to confirm 52 an award based on a consumer credit transaction, the party seeking to 53 confirm the award shall plead the actual terms and conditions of the 54 agreement to arbitrate. The party shall attach to its petition (a) the 55 agreement to arbitrate; (b) the demand for arbitration or notice of 56 intention to arbitrate, with proof of service; and (c) the arbitrationA. 4438 5 1 award, with proof of service. If the award does not contain a statement 2 of the claims submitted for arbitration, of the claims ruled upon by the 3 arbitrator, and of the calculation of figures used by the arbitrator in 4 arriving at the award, then the petition shall contain such a statement. 5 The court shall not grant confirmation of an award based on a consumer 6 credit transaction unless the party seeking to confirm the award has 7 complied with this section. 8 § 10. This act shall take effect on the first of January next succeed- 9 ing the date on which it shall have become a law, except that section 10 three of this act shall take effect on the one hundred fiftieth day 11 after this act shall have become a law.