The New York Department of Financial Services has issued guidance “to address potential confusion” about how to comply with a new statute of limitations requirement that went into effect last week, lowering the period to three years while also disallowing a partial payment to restart the statute of limitations, and requiring additional disclosures to be made.
There are a lot of moving parts related to debt collection laws and regulations currently afoot in New York and the guidance issued by the DFS is an attempt to make sure that collectors are providing consumers with accurate information with respect to the statute of limitations. The guidance offers disclosures for two separate situations — one where a collector is initiating communication for the first time and one where communication was initiated before the changes to the law went into effect.
The guidance follows a warning that was sent late last month by the Attorney General of New York to some of the largest debt collectors operating in the state, making sure they were aware of the new disclosures and reminding them of other changes to how debts are collected in the Empire State.
For first-time communications, the DFS suppled the following disclosure:
“We are required by regulation of the New York State Department of Financial Services to notify you of the following information. This information is NOT legal advice: Your creditor or debt collector believes that the legal time limit (statute of limitations) for suing you to collect this debt may have expired. It is a violation of the Fair Debt Collection Practices Act, 15 U.S.C. section 1692 et seq., to sue to collect on a debt for which the statute of limitations has expired. If a creditor sues you to collect on this debt, you may be able to prevent the creditor from obtaining a judgment against you. To do so, you must tell the court that the statute of limitations has expired.
Even if the statute of limitations has expired, you may choose to make payments on the debt. We are also required to tell you that, for certain kinds of debts, if you make a payment on a debt, admit to owing a debt, or promise to pay a debt, the time period in which the debt is enforceable in court may start again. However, your creditor or debt collector believes that restarting the time period on this debt is prohibited by law, and whether or not you acknowledge, promise to pay, or make a payment on this debt, your creditor or debt collector will NOT sue you to collect this debt.
If you waive the statute of limitations on a debt, the time period in which the debt is enforceable in court may start again.
If you would like to learn more about your legal rights and options, you can consult an attorney or a legal assistance or legal aid organization.”
In situations where communications were initiated before the changes went into effect, the DFS is advising collectors to notify consumers about the change in the law and provided the following statement:
“We are notifying you of a change in the law that affects your debt. This information is NOT legal advice: A new law affects this debt because your creditor or debt collector believes that the legal time limit (statute of limitations) for suing you to collect this debt has expired. Previously, we informed you that if you make a payment on the debt, admit to owing the debt, or promise to pay the debt, the time to sue could start again. This is no longer the case. Under the new law, if the time to sue has expired, admitting to owing the debt, promising to pay the debt, or making a payment on the debt will not restart the time period during which you can be sued for the debt. Your creditor or debt collector will NOT sue you to collect this debt.
It is also a violation of the Fair Debt Collection Practices Act, 15 U.S.C. section 1692 et seq., to sue to collect on a debt for which the statute of limitations has expired. If a creditor sues you to collect on a debt for which the time to sue has expired, you may be able to prevent the creditor from obtaining a judgment against you. To do so, you must tell the court that the statute of limitations has expired.
If you would like to learn more about your legal rights and options, you can consult an attorney or a legal assistance or legal aid organization.”
Questions about the guidance can be emailed to counsel@dfs.ny.gov
