“New York state court administrators said Tuesday they have finalized rules designed to ban the collection of debts that consumers did not incur, have already paid off or which have been extinguished by the passage of the six-year statute of limitations.
Chief Judge Jonathan Lippman said the new rules will reduce instances where abusive and aggressive collectors-often holding debts that have changed hands several times over several years-seek default judgments against consumers in court based on incomplete or erroneous documents.
“If you are entitled to a judgment, you should get it,” Lippman said in an interview Tuesday. “But don’t come into court without the requisite gravitas. You have to have the particulars of the debt you are trying to collect on. The courts are all about fairness and having a level playing field. These new rules are to ensure that level playing field.”
The debts largely concern unpaid charges run up on credit cards. Holders of the debts may go to court to seek payment through default judgments, including the garnishment of debtors’ paychecks or bank accounts.
Among the changes to the final rules prompted by the comments was giving holders of old debts an extra nine months, until July 1, 2015, to file for defaults by following the current rules, with limited exceptions.
The courts also agreed to alter the requirement that a copy of the initial debt agreement be included in the default filing-documentation that banks and the debt-collection industry said is sometimes not available electronically. Instead, the courts said a copy of the last statement on the account that was sent to the debtor/consumer by the original creditor would suffice to show the existence of the account.
The final rules would apply to default filings in Supreme Court and Civil Court or other forums where the rules applied.
The new rules will:
• Require creditors to submit affidavits containing detailed proof in support of default judgment applications;
• Require that default applications contain information about the debtor’s original credit agreement, a detailed accounting of each stop in the debt’s chain of ownership and documentation that identifies the target of the default judgment as the correct debtor;
• Require the creditor’s attorney to file an affirmation that the statute of limitations has not expired;
• Require a new form of verification that notification was of the efforts made to notify the debtor of the impending default action.
The requirements that each step in a debt’s chain of ownership be documented becomes effective on Oct. 1 for all debts purchased on or after that date. “