Proper Procedure in New York when Collecting a Debt
According to the New York Attorney General , the following is legitimate when a creditor is collecting a debt:
Creditors may contact you directly about a debt you owe them. For example, your credit card company may call you to remind you that you have not been making the minimum payments necessary to keep your account from defaulting. Generally, federal consumer protection laws regarding fair debt collection do not apply in these situations, but the creditors are still required to comply with New York State law governing debt collection.
What is Improper and Illegal Procedure in New York when collecting a Debt
The following however violates the New York State Debt Collection Procedures Law which does not allow creditors (and their agents) to do the following:
o communicating the nature of your debt to your employer prior to obtaining a judgment against you;
o threatening to take an action that it can not or would not normally undertake;
o threatening to collect a fee over and above the debt that you owe;
o communicating with you in a manner which simulates a judicial process or which gives the appearance of being authorized or issued by a governmental entity; and
E(TM)? contacting you or a family member with such frequency or at such unusual hours
Arresting the Bad Guys and Filing State Suits
NY has become enraged at the mistreatment of its consumers in these debt settlement and collection acts. In 2009 the Attorney General has arrested violators and sued others, including law firms who have knowingly violated the law: The following are the press releases on the most recent cases in 2009:
The Attorney General's has released to the public these most recent enforcement actions:(review them to see if any of these agencies were harassing you or defrauding you):
On April 14, 2009 the New York Attorney General announced criminal charges against Long Island-based American Legal Process ("ALP") and its CEO and President William Singler for a fraudulent business scheme. This company allegedly failed to provide proper legal notification to thousands of New Yorkers who were facing debt-related lawsuits, causing them unknowingly to default and to have costly judgments entered against them without the chance to respond or defend themselves.
Attorneys are not immune!
In addition, Cuomo announced his intent to sue one of ALP's largest customers, the law firm of Foster & Garbus, for violations of New York State's consumer protection laws. According to Cuomo, Forster & Garbus used ALP to serve over 28,000 summons and complaints across the state, but failed to supervise the company and relied on legal papers from ALP that it knew or should have known were false. If this law firm was the one which sued you for an unpaid debt, let the attorney general's office know. You will find the contact information for the AG office on the list of web sites on legal guide Part I
What a Process Server must do in New York
The A G has informed the public of what are the specific rules which must be followed by process servers: Know about Process Servers: Know Your Rights! If a creditor decides to bring a lawsuit against you to try to collect a debt, it will typically hire a law firm to bring the lawsuit. Legal process servers are hired by law firms to serve legal papers which notify individuals that they are being sued. This is NOT a judgment and this CANNOT begin an attachment on your assets. It is information you are being sued. Period. New York law makes clear how the legal documents that start a lawsuit must be served on anyone being sued. This process must be followed to be a legally valid lawsuit.
Rules for Process Servers and
A process server can: o Deliver the summons directly to the person being sued; or o Deliver the summons to a substitute person of suitable age and discretion at the place of business or the home of the person being sued and then mail the summons; or o If several attempts at the first two fail, the process fail, the process server can post the summons on the door of the home or workplace of the person being sued and mail it as well.
What to do with a Summons and Complaint
The New York Attorney General has provided specific advice to consumers on how to handle a Summons and Complaint and how to Vacate a Default Judgment.
DO NOT IGNORE A SUMMONS AND COMPLAINT!
If you are served with legal papers, it is important that you respond, even if you do not believe that you owe any money. If you fail to respond, the court will eventually enter a default judgment against you and the creditor may be able to freeze your bank account or garnish your wages. This means filing an Answer. A lawyer can do this for you or assist you in doing it.
How to Vacate a Default Judgment
In order to remove or "vacate" a Default Judgment that has been entered against a person, New York law requires that the defendant make an application to the court that entered the judgment. To assist you with this application, the New York Attorney General recommends the defendant should consult an attorney.
In recent years, the Office of the Attorney General has uncovered fraudulent practices by certain process service companies who claim that they have provided documents to individuals when, in fact, they never did so. Improper service is a legitimate reason for petitioning the court for vacating a default judgment, but it must be done in a timely manner or the judgment stands and can begin to cause an attachment on your wages or assets.
Consumer Protection in New York
the New York Bureau of Consumer Frauds and Protection, part of the Economic Justice Division, prosecutes those businesses and individuals who are engaged in fraudulent, misleading, deceptive or illegal trade practices. In addition to litigating, the Bureau also mediates thousands of complaints each year from individual consumers. A large percentage of these complaints are resolved satisfactorily through the mediation process. As part of its mission, the Bureau provides information to consumers and seeks to ensure a fair and vigorous market place. The Bureau also drafts legislation and conducts studies and writes reports on emerging consumer problems and issues. The New York State Consumer Helpline: is 1-800-771-7755
More Lawsuits and Arrests of More Bad Guys in New York!
Readers to this legal guide might be interested about recent arrests and consumer rights lawsuits in New York for violations of the fair debt collection act:
Attorney General Cuomo Sues To Throw Out Over 100,000 Faulty Judgments Entered Against New York Consumers In Next Stage Of Debt Collection Investigation
Cuomo Announces Intent To Sue 'Amerimod' Loan Modification Company In Investigation Of Foreclosure Rescue Scams Targeting Homeowners Nationwide
Attorney General Cuomo Launches Inquiry Into Debt Collectors Across New York State
Attorney General Cuomo Sues Debt Settlement Companies For Deceiving And Harming Consumers
Attorney General Cuomo Announces Nationwide Investigation Into Debt Settlement Industry
Attorney General Cuomo Announces Arrest Of Long Island Business Owner For Denying Thousands Of New Yorkers Their Day In Court
Filing a Complaint in NYS for violations of the Fair Debt Collection Act
New Yorkers should be proud that their state has taken the lead in fighting against the improper and illegal activities of these debt settlement and collection companies. Unfortunately many states still try to create a "business friendly" approach which too often means let the consumers suffer illegal and improper procedures. The prior federal administration severely weakened most state's laws against excessive interest. Unpaid debts now have practically no ceiling on interest which means the final bill can be much more than the original debt.
When you have received a collection notice, lawsuit or even a judgment on an old debt which may have already been paid, or belongs to someone else, or has been discharged in bankruptcy, keep the following in mind. After a creditor writes off your debt, it can then be sold to a collection agency. That agency may sell it again and the next one again. By the time the debt is assigned to a law firm, it can be years pass the statute of limitations.
Additonal comments from the Author
All of the original contracts have been lost and there may be no legal foundation for enforcing the debt. One way of knowing this is that the agency will have no discernible address or they will say they are collecting from a creditor, but the creditor does not know who they are. They will call you at work , and they will not listen to any explanation at all. They will refuse any suggested payment plan and demand a large sum at once. Often these collection agencies and even law firms will file a suit against you, misspell your name, or deliberately send it to the wrong address. You have no notice but they go to court anyway, get a default judgment against you when you do not come to court, and file a judgment lien on your assets such as a home you are trying to sell, or they report you to a credit bureau as a deadbeat.
Final comments from the Author
You are allowed to send a 100 word explanation in writing to the three credit bureaus (which they must print) as to why the debt is invalid. Also, many attorneys will take such a case on a contingency basis. Any Violations of the fair debt collection act has a fee shifting rule (the creditor pays your attorney). Not only do you get the debt out of your life, you may get a financial award also. Be sure to write to your congress representative to have a stronger federal law to restore a ceiling on interest and to curtail these illegal collection practices.
In January 2011 Andrew Cuomo the former Attorney General of New York State took the oath as Governor. We can expect that his administration will continue his prior efforts to curb debt settlement and debt collection companies. Also, we can anticipate that he will make an effort to get the State legislature focused on consumer protection laws.
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