BILL
SUBJECT
DATE
The Business Council of New York State opposes the above referenced legislation that would reduce the statute of limitations on consumer credit actions from six years to three years; bar debt collectors from collecting debts upon the expiration of the three year statute of limitations; impose costly legal procedures on businesses; and permit court clerks to review applications for default judgments.
This legislation would apply to all businesses that extend a credit to an individual and the money, property, or service which is the subject of the transaction is primarily for personal, family or household purposes.
Currently, New York State consumers have a six year statute of limitations to settle an overdue debt which is a sensible time frame. The six year statute of limitations provides consumers, employed or unemployed, the added financial flexibility to get back on their feet and plan a sensible repayment schedule to the creditor.
If enacted, this legislation would reduce the statute of limitations on consumer credit actions from six to three years. By reducing the statute of limitations to three years, it would compel creditors to act quickly and file a lawsuit to collect an overdue debt. An increase of debt collection lawsuits would be an added expense to businesses and result in a damaged credit rating or bankruptcy for the consumer. Additionally, it would prohibit debt collectors from collecting debts on which the three year statute of limitations has expired.
This legislation would impose costly legal procedures on businesses by requiring that the complaint in consumer credit transactions 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 creditor seeks to collect. The legislation would require that a copy of the contract be attached to the complaint and an additional notice of a pending consumer credit action be mailed to the defendant by the clerk of the court.
Under this legislation, court clerks would be permitted to review applications that contain complex contracts, account statements, and finance charges for default judgments. These provisions would add significant costs to the overburdened court system and unduly change the current practice of judges reviewing applications for default judgments.
For these reasons, The Business Council of New York State is opposed to A.9053 and urges the State Senate to reject this legislation.