A09053 Summary:

BILL NOA09053
 
SAME ASSAME AS S07349
 
SPONSORWeinstein (MS)
 
COSPNSRJaffee, Millman, Titone, Colton, Weprin, Galef, Dinowitz, Mosley, Otis, Paulin, Zebrowski, O'Donnell, Crespo, Jacobs, Rosenthal, Scarborough, Gunther, Fahy, Robinson, Moya, Abinanti, Bronson
 
MLTSPNSRArroyo, Brennan, Camara, Cook, Cymbrowitz, Glick, Gottfried, Magee, Markey, Perry, Rivera, Schimel, Solages, Sweeney
 
Amd SS213, 3012, 3215, R3016 & R3211, add SS214-f, 306-d & 7515, CPLR
 
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.
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A09053 Actions:

BILL NOA09053
 
03/11/2014referred to judiciary
03/25/2014reported referred to codes
04/01/2014reported
04/03/2014advanced to third reading cal.546
05/28/2014passed assembly
05/28/2014delivered to senate
05/28/2014REFERRED TO JUDICIARY
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A09053 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A9053
 
SPONSOR: Weinstein (MS)
  TITLE OF BILL: An act to amend the civil practice law and rules, in relation to consumer 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 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; (ii) 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 (iii) 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 judgments in consumer credit actions to include a statement that after reasonable 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 defend- ant may not recognize the debt as theirs from the minimal information 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 applications for default judgments 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: A.2678/S.2454 - Passed Assembly/S. Judiciary 2011-12: 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.
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A09053 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          9053
 
                   IN ASSEMBLY
 
                                     March 11, 2014
                                       ___________
 
        Introduced  by  M.  of  A.  WEINSTEIN,  JAFFEE, MILLMAN, TITONE, COLTON,
          WEPRIN, GALEF -- Multi-Sponsored by -- M. of  A.  CRESPO,  CYMBROWITZ,
          GLICK, GOTTFRIED, JACOBS, PERRY, SCHIMEL -- (at request of the Depart-
          ment 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.
    21    For  purposes  of  this section, "the right to collect consumer credit
    22  debt" shall mean any attempts by the creditor, third party purchaser, or

    23  other authorized third party to collect such  debt  including,  but  not
    24  limited to, calls, mail or other attempts to collect.
    25    §  4.  The  civil  practice  law  and rules is amended by adding a new
    26  section 306-d to read as follows:
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD05625-02-3

        A. 9053                             2
 
     1    § 306-d. Additional mailing of notice in an action arising  out  of  a
     2  consumer  credit transaction. 1. At the time of filing with the clerk of
     3  the proof of service of the summons and complaint in an  action  arising

     4  out  of a consumer credit transaction, the plaintiff shall submit to the
     5  clerk  a  stamped  envelope  addressed  to the defendant together with a
     6  written notice in clear type of no less than twelve-point  in  size,  in
     7  both English and Spanish, and containing the following language:
     8                              NOTICE OF LAWSUIT
     9  (DATE)
 
    10  (NAME OF COURT)
    11  (COUNTY)
    12  (STREET ADDRESS, ROOM NUMBER)
    13  (CITY, STATE, ZIP CODE)
 
    14  (NAME OF DEFENDANT)
    15  (ADDRESS OF DEFENDANT)
 
    16  Plaintiff:__________________________________
    17  Defendant:__________________________________
    18  Name of original creditor, unless same:______________________________

    19  Index number:_______________________________
 
    20  Attention:  a  lawsuit  has been filed against you claiming that you owe
    21  money for an unpaid credit card, medical, student loan or other debt.
    22  You should go to the court clerk's office at the above address  as  soon
    23  as possible to respond to the lawsuit. You may wish to contact an attor-
    24  ney. If you do not have an attorney, help is available at the court.
    25  If  you  do  not  respond to the lawsuit, the court may enter a judgment
    26  against you. Once entered, a judgment is good and can  be  used  against
    27  you  for  twenty  years,  and  your  money,  including a portion of your
    28  paycheck and/or bank account, may be taken. Also, a judgment  will  hurt

    29  your  credit  score  and  can affect your ability to rent a home, find a
    30  job, or take out a loan.
    31  You CANNOT be arrested or sent to jail for owing a debt.
    32  It is important that you go to the court clerk's office listed above and
    33  bring this notice with you.  Additional information can be found at  the
    34  court system website at:  www.courts.state.ny.us
    35    2. The face of the envelope shall be addressed to the defendant at the
    36  address  at  which process was served, and shall contain the defendant's
    37  name, address (including apartment number) and zip code. The face of the
    38  envelope also shall state the appropriate clerk's office as  its  return
    39  address.
    40    3.  The  clerk  promptly  shall  mail  to  the  defendant the envelope

    41  containing the additional notice set forth in subdivision  one  of  this
    42  section.  No default judgment based on the defendant's failure to answer
    43  shall be entered unless there has been compliance with this section, and
    44  at least twenty days have elapsed from the date of mailing by the clerk.
    45    § 5. Subdivision (a) of section 3012 of the  civil  practice  law  and
    46  rules is amended to read as follows:
    47    (a)  Service  of  pleadings.  The  complaint  may  be  served with the
    48  summons, except that in an action arising out of a consumer credit tran-
    49  saction, the complaint shall be served with the  summons.  A  subsequent
    50  pleading  asserting  new or additional claims for relief shall be served
    51  upon a party who has not appeared in the manner provided for service  of

    52  a  summons.  In any other case, a pleading shall be served in the manner

        A. 9053                             3
 
     1  provided for service of papers generally. Service of an answer or  reply
     2  shall  be made within twenty days after service of the pleading to which
     3  it responds.
     4    §  6.    Rule  3016  of the civil practice law and rules is amended by
     5  adding a new subdivision (i) to read as follows:
     6    (i) Consumer credit transactions.  In  an  action  arising  out  of  a
     7  consumer  credit  transaction where a purchaser, borrower or debtor is a
     8  defendant, the contract or other written instrument on which the  action
     9  is  based  shall be attached to the complaint and the following informa-
    10  tion shall be set forth in the complaint:
    11    1. The name of the original creditor;

    12    2. The last four digits of the original account number;
    13    3. The date and amount of the last payment;
    14    4. If the complaint contains a cause of action  based  on  an  account
    15  stated,  the  date that the final statement of account was mailed to the
    16  defendant;
    17    5. An itemization of the amount sought, by (i) principal; (ii) finance
    18  charge or charges; (iii) fees imposed by  the  original  creditor;  (iv)
    19  collection  costs;  (v)  attorney's  fees;  (vi) interest; and (vii) any
    20  other fees and charges. The term "finance charge" means a finance charge
    21  as defined in Regulation Z, 12 C.F.R. § 226.4.
    22    6. Whether the plaintiff is the original creditor. If the plaintiff is

    23  not the original creditor, the complaint shall state  (i)  the  date  on
    24  which  the debt was assigned to the plaintiff; and (ii) the name of each
    25  previous owner of the account  and  the  date  on  which  the  debt  was
    26  assigned to that owner.
    27    7.  Any  matters  required to be stated with particularity pursuant to
    28  rule 3015 of this article.
    29    § 7. Subdivision (e) of rule 3211 of the civil practice law and rules,
    30  as amended by chapter 616 of the laws of 2005, is  amended  to  read  as
    31  follows:
    32    (e)  Number,  time  and waiver of objections; motion to plead over. At
    33  any time before service of the responsive pleading is required, a  party
    34  may  move  on one or more of the grounds set forth in subdivision (a) of

    35  this rule, and no more than one such  motion  shall  be  permitted.  Any
    36  objection  or  defense  based upon a ground set forth in paragraphs one,
    37  three, four, five and six of subdivision (a)  of  this  rule  is  waived
    38  unless  raised  either  by  such motion or in the responsive pleading. A
    39  motion based upon a ground specified in paragraph two, seven or  ten  of
    40  subdivision  (a) of this rule may be made at any subsequent time or in a
    41  later pleading, if one is permitted; in any action other than an  action
    42  arising out of a consumer credit transaction where a purchaser, borrower
    43  or  debtor  is a defendant, an objection that the summons and complaint,
    44  summons with notice, or notice of petition and petition was not properly
    45  served is waived if, having raised such an objection in a pleading,  the

    46  objecting  party  does not move for judgment on that ground within sixty
    47  days after serving the pleading, unless the court extends the time  upon
    48  the  ground of undue hardship. The foregoing sentence shall not apply in
    49  any proceeding under subdivision one or two  of  section  seven  hundred
    50  eleven  of  the real property actions and proceedings law. The papers in
    51  opposition to a motion based on improper service shall contain a copy of
    52  the proof of service, whether or  not  previously  filed.  An  objection
    53  based  upon a ground specified in paragraph eight or nine of subdivision
    54  (a) of this rule is waived if a party moves on any of  the  grounds  set
    55  forth  in subdivision (a) of this rule without raising such objection or

        A. 9053                             4
 

     1  if, having made no objection under subdivision (a) of this rule,  he  or
     2  she does not raise such objection in the responsive pleading.
     3    §  8.  Subdivision  (f)  of section 3215 of the civil practice law and
     4  rules, as amended by chapter 453 of the laws of 2006, is amended  and  a
     5  new subdivision (j) is added to read as follows:
     6    (f)  Proof.  On any application for judgment by default, the applicant
     7  shall file proof of service of the  summons  and  the  complaint,  or  a
     8  summons  and  notice  served  pursuant to subdivision (b) of rule 305 or
     9  subdivision (a) of rule 316 of this chapter,  and  proof  of  the  facts
    10  constituting the claim, the default and the amount due by affidavit made
    11  by  the party, or where the state of New York is the plaintiff, by affi-
    12  davit made by an attorney from the office of the  attorney  general  who

    13  has  or  obtains knowledge of such facts through review of state records
    14  or otherwise. Where a verified complaint has been served, it may be used
    15  as the affidavit of the facts constituting the claim and the amount due;
    16  in such case, an affidavit as to the default shall be made by the  party
    17  or  the  party's attorney. In an action arising out of a consumer credit
    18  transaction, if the plaintiff is not the original creditor,  the  appli-
    19  cant  shall  include:  (i)  an affidavit by the original creditor of the
    20  facts constituting the debt, the default in payment, the sale or assign-
    21  ment of the debt, and the amount due at the time of sale or  assignment;
    22  (ii) for each subsequent assignment or sale of the debt to another enti-
    23  ty,  an  affidavit  of sale of the debt by the debt seller, completed by

    24  the seller or assignor; and (iii) an  affidavit  of  a  witness  of  the
    25  plaintiff, which includes a chain of title of the debt, completed by the
    26  plaintiff  or  plaintiff's  witness.  When  jurisdiction  is based on an
    27  attachment of property, the  affidavit  must  state  that  an  order  of
    28  attachment  granted in the action has been levied on the property of the
    29  defendant, describe the property and state its value. Proof  of  mailing
    30  the  notice  required by subdivision (g) of this section, where applica-
    31  ble, shall also be filed.
    32    (j) A request for a default judgment entered by  the  clerk,  must  be
    33  accompanied by an affidavit by the debt collector (who may be the plain-
    34  tiff  or plaintiff's attorney) stating that after reasonable inquiry, he

    35  or she has reason to believe that the statute  of  limitations  has  not
    36  expired.
    37    §  9.  The  civil  practice  law  and rules is amended by adding a new
    38  section 7515 to read as follows:
    39    § 7515. Confirmation of an award based on  a  consumer  credit  trans-
    40  action.  In any proceeding under section 7510 of this article to confirm
    41  an award based on a consumer credit transaction, the  party  seeking  to
    42  confirm  the  award  shall  plead the actual terms and conditions of the
    43  agreement to arbitrate. The party shall attach to its petition  (1)  the
    44  agreement  to  arbitrate;  (2)  the  demand for arbitration or notice of
    45  intention to arbitrate, with proof of service; and (3)  the  arbitration

    46  award,  with proof of service. If the award does not contain a statement
    47  of the claims submitted for arbitration, of the claims ruled upon by the
    48  arbitrator, and of the calculation of figures used by the arbitrator  in
    49  arriving at the award, then the petition shall contain such a statement.
    50  The  court  shall not grant confirmation of an award based on a consumer
    51  credit transaction unless the party seeking to  confirm  the  award  has
    52  complied with this section.
    53    § 10. This act shall take effect on the first of January next succeed-
    54  ing  the  date  on which it shall have become a law, except that section
    55  three of this act shall take effect on  the  one  hundred  fiftieth  day
    56  after this act shall have become a law.
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