Debt Collection Guide - New York City (1)

7/28/2019 Debt Collection Guide - New York City (1)

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DebtCollection

Guide


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This Update includes new inormation you should know when dealingwith debt collectors.

1.In New York, a debt collector cannot collect or attempt tocollect on a payday loan.Payday loans are illegal in New York. A payday loan is a high-interestloan borrowed against your next paycheck. To apply or a paydayloan, you need to have a checking account and proo o income. InNew York State, most payday loans are handled by phone or online.I a collection agency tries to collect on a payday loan, visit

nyc.gov/consumers or contact 311 to fle a complaint with DCA.

2.Beware o debt collection companies or companies workingwith debt collection companies that oer you a credit card i

you repay, in part or in ull, an old debt that may have expired.Companies may use terms like Fresh Start Program or BalanceTranser Program to describe oers to transer your old debt toa new credit card account ater you make a certain number o

payments. If you accept the credit card offer and start making pay-ments, the debt collection agencys time limit (statute of limitations)

for suing you to collect this debt will restart. The company oeringthe credit card may not tell you that this is a consequence o gettingthe credit card. See the section What Should You Do When a DebtCollection Agency Contacts You? or inormation about statute olimitations.

3.It is illegal or a debt collection agency to use caller IDspoong.Some debt collection agencies are using spooed (or aked) phonenumbers to disguise their identities on caller ID. For example, a debtcollector may use the number o a relative or government agency toget you to answer the phone. I you get a spooed call rom a debtcollection agency, visit nyc.gov/consumers or contact 311 to fle acomplaint with DCA.

For the most up-to-date inormation, please monitor nyc.gov/consumers

and search debt collectors.

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The New York City Consumer Protection Law provides the strongestanti-harassment protection in the country when it comes to debt collec-tion. With passage o Local Law 15 o 2009, City residents gained even

greater protections when contacted by debt collectors. The new lawalso expanded the licensing and regulatory authority o the Departmento Consumer Aairs (DCA) to include debt buyers, businesses thatbuy overdue debt, and then try to collect money sometimes by takingconsumers to court.

In recent years, debt collection has been the #1 complaint category orDCA. Although DCA can mediate many o the complaints we receive,

we cannot mediate issues that involve money judgments and rozenbank accounts. Please see the box marked Important Inormationabout Money that Cannot Be Taken to Pay Judgments later inthis guide.

DCA updated this guide to include important new inormation aboutyour rights and debt collectors responsibilities when they seek tocollect money. Knowing your rights is your greatest protection. Makesure debt collectors know that you know your rights.

Licensing Law

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Introduction

All debt collection agencies that seek to collect personal or

household debts rom New York City residents must have a DCA

license no matter where the agency is located. Creditors oten use

debt collection agencies to help them collect overdue debts. A creditoris the individual or business that provided the original service or creditor which you owe money. For example, credit card companies andcellular phone companies are creditors. Sometimes, creditors sell yourdebt to a third party called a debt buyer. No matter i the debt collectionagency is working or a creditor or or itsel as the debt buyer, it musthave a DCA license and ollow all laws or risk fnes, penalties, or thesuspension or loss o its license.

NOTE: Debt collectors that collect child support payments must

be licensed and comply with special requirements.To learn require-ments or a Debt Collection Agency license, visit DCA onlineat nyc.gov/consumers.


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Exceptions to the Licensing Law

Creditors A manager or supervisor at the

relevant organization

Government employees collectingin their ofcial capacities

The relevant government agency

Nonproft credit counselingorganizations

New York State Banking Department:1-877-226-5697

Public utilities regulated by thePublic Service Commission

New York StatePublic Service Commission:

1-800-342-3355Note: The New York State Public ServiceCommission does not accept Long IslandPower Authority (LIPA) complaints.

When a debt collector contacts you the frst time, it is usually in theorm o a dunning letter (collection letter) or a phone call. Never ignorea debt collector, even i you do not recognize the debt. DCA oers achecklist to help you protect your rights:

Check that the debt collection agency is licensed. Debt collection

agencies must include their DCA license number in all letters sentto you. To veriy i a debt collection agency is licensed, call 311(212-NEW-YORK outside NYC) or search DCAs Instant License Check,available online at nyc.gov/consumers.

Check that the debt collection agency provided required inorma-

tion. By law, debt collection agencies must provide the ollowinginormation in all communications to you: the name of the debt collection agency

the name of the original creditor

the amount of the debt

a call-back number to a phone that is answered by a live person and

the name o that person. I your call is routed rom the agencys maintelephone line, the live person qualifed to handle your questionsmust answer the call within 60 seconds.

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What Should You Do When a Debt Collection

Agency Contacts You?

The law does not apply to

debt collection activitiesperormed by:

For inormation or to le

a complaint about these

activities, contact:


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Make sure the debt collector sends you validation o the debt

especially i the rst collection attempt is by phone.

Validation must include: the name of the original creditor

the amount of the debt

information about your right to dispute the debt

The debt collection agency must send you validation within fve (5) dayso contacting you.

Always request that the debt collector send you written verication

o the original debt even i you recognize the debt.Verifcation must include: a document rom the original creditor that shows you made the

purchase and owe the debt a copy o the fnal account statement rom the original creditor AND

a document that lists:

the total principal amount you owe (The principal may beeither the original amount borrowed OR the part o theamount borrowed that remains unpaid minus any charges or ees.)

each additional charge or ee you owe that separately lists:

* the total or each charge or ee and the date each was incurred * description o why you must pay the additional charge or ee

Once you request verifcation, a debt collection agency may not contactyou to collect the debt until it sends you verifcation. Do not bepressured into making any payments until you have receivedverifcation o the original debt.

Conrm i you owe the debt. Who is the original creditor? Do youremember buying a product or service rom this business? Is theamount o the debt correct? Checking your credit report can help. Seethe box Think Youre the Victim o Identity Thet? later in this guide.

Check how old the debt is. I the statute o limitations on the debt isexpired, the collector must disclose this inormation to you, along withinormation about your legal rights. The statute o limitations is theperiod o time that a creditor or collector can sue you in court to collect

the debt.

I the statute o limitations expired, by law, the collector must include inthe collection letter the ollowing statement in at least 12 point type andin a color dierent rom other text:

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WE ARE REQUIRED BY LAW TO GIVE YOU THE FOLLOWINGINFORMATION ABOUT THIS DEBT. The legal time limit (statute olimitations) or suing you to collect this debt has expired. However, isomebody sues you anyway to try to make you pay this debt, courtrules REQUIRE YOU to tell the court that the statute o limitations hasexpired to prevent the creditor rom obtaining a judgment. Even thoughthe statute o limitations has expired, you may CHOOSE to make pay-ments. However, BE AWARE: i you make a payment, the creditorsright to sue you to make you pay the entire debt may START AGAIN.

The statute o limitations is generally six years on credit card debt. Youmay wish to speak with an attorney i you have questions or concernsabout the statute o limitations.

I you have hired an attorney, write to the debt collection agency withyour attorneys name and contact inormation. Once the debt collec-tion agency knows you have an attorney, the agency may not contactyou directly, but must deal with your attorney only.

Keep a copyront and backo every letter you get rom or sendto the debt collection agency. You should also take notes on anytelephone conversations you have with debt collectors, including the

date, name o the person you speak to, and details o the call.

Beware o sharing with the debt collection agency inormation suchas your e-mail address or cell phone numberthe collector will use it.

Also beware o sharing your Social Security Number.

False Claims and Harassment Are Illegal.

A debt collection agency may not make alse statements, including:

claim that it represents a government agency, such as a marshal,

sheri, or District Attorneys Ofce threaten that you will be arrested

threaten that it will report you to immigration authorities

claim that you have committed a crime

threaten that it will have you evicted, take or garnish your wages,

take the money rom your bank account, or take your personalbelongings without frst obtaining a judgment against you in court

A debt collection agency may not:

engage in acts of violence, threats of violence, or obscene language

claim the debt owed is greater than it is

claim you owe the debt when you do not

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claim you can be sued if the statute of limitations expired

call you before 8 AM or after 9 PM or more than twice a week if the

collector has made contact with you

advertise a debt or reveal it to anyone, including family members

and neighbors

contact your employer, family, friends, and neighbors for any reasonother than to locate you. Collectors cannot discuss the allegeddebt with anyone other than you.

I a debt collection agency is unlicensed, ails to give you inorma-

tion required by law, or unlawully threatens or harasses you, call

311 or visit nyc.gov/consumers to le a complaint with DCA. Re-

member to keep notes o phone calls, including the date, time, andname o the person who called you, and to send DCA all documentationthat supports your complaint.

Write the debt collection agency within 30 days o receiving validationphone calls are not enoughto confrm that its inormation on the debtis wrong. For example, alert the collector that the amount owed is wrongbecause it doesnt include payments youve made. Include with yourletter copies o any proo that the collectors inormation is wrong.

You can also stop the collector rom contacting you during the time you

dispute the debt by writing a cease collection letter. Simply write:I am disputing this debt. Please cease all further communication

in regard to this matter. If you have already reported this debt to

the credit reporting agencies, please contact them to report that

this debt is disputed and ask them to delete this debt from my

credit report. Any further communication beyond what is legally

allowed will be a violation of the law.

In your cease collection letter you should mention any abusive tacticsthat the collectors employees have used with you.

Send your cease collection letter to the collection agency and to theoriginal creditor via certifed mail, return receipt requested, along withcopies o any documents that support your dispute. Keep a copy o theletter or your records.

Disputing the Debt: What to do i a debt collectionagency sends you inormation about the original debtthat is wrong


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Think Youre the Victim of Identity Theft?

I a debt collector contacts you about debt you do not believe youowe, ollow these steps:

1. Check your credit report. You are entitled to one ree credit report

each year rom the three major credit reporting agencies. To get

your ree credit reports, visit www.annualcreditreport.com orcall 1-877-322-8228. For identity thet prevention tips, visit

nyc.gov/consumers or call 311.

2. File a police report at your local precinct.

3. Dispute the debt in writing (as described above) within 30 daysand send a copy o your police report and a copy o a completed

Federal Trade Commission (FTC) ID Thet Afdavit (available

online at www.tc.gov/idthet) to the debt collection agency. Thecollection agency must review your documentation and send you

a written decision stating whether or not the agency believes

you do not owe the debt. Until the debt collection agency ormallydetermines that it believes you still owe the debt, it must stop

trying to collect the debt rom you.

Note:

By law, i a debt collection agency determines that your claim o

identity thet is valid, it must: Tell the credit reporting agencies to delete the debt from your

credit report (if the collection agency reported the debt).

Notify the original creditor that it stopped collection attempts based

on your report o identity thet.

inorm you o any legal action the agency intends to take or to respondto any other communications rom you. Note that a collection agencymay sue you ater receiving your cease collection letter.

I a debt collection agency continues to communicate with you or

harass you ater you send a cease collection letter, tell the agency

it is violating the law and call 311 or visit nyc.gov/consumers to le

a complaint with DCA. You may also be able to take legal action

against a collector that persists in trying to collect money. For any legal

case, remember to document your contact with the collector.

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Ater receiving a cease collection letter, a collection agency is onlyauthorized to contact you under limited circumstances, such as to


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Find Something Wrong on Your Credit Report?

Under the Federal Fair Credit Reporting Act, you have the right to

dispute wrong inormation on your credit report. Follow this checklist:

Write to the credit reporting agency. Include your name, address, dateo birth, and Social Security Number so the agency can identiy you.

Identiy the specifc debt you are disputing, explain in detail why the

inormation is wrong, and request that the debt be changed or removed.Include copies o any documentation that supports your position.

Send your dispute letter certifed mail, return receipt requested.

Send a copy o the letter to the source o the credit reporting agencysinormationthis may be a debt collection agency or the original

creditor and should be listed on your credit report. Keep copies o theletters you send.

In most cases, the credit reporting agency is required to investigateyour dispute and give you the results in writing, as well as a ree copy

o your updated credit report.

For more inormation on disputing items in your credit report, visit the

FTC online at www.tc.gov.

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Paying the Debt: I the debt is valid

Review your fnances and fgure out your ability to repay the debt.Remember that ailure to pay o debts can lead to a poor credithistory and make it difcult to get credit.

I you cannot pay o the debt right away, be honest with the debtcollector. You may be able to negotiate a lower amount. There is also agood chance the debt collector will work out a payment plan with you.

Tips when negotiating with creditors and debt collection agencies

As with any negotiation it is important to be prepared. DCA oers theollowing checklists to help with your preparations.

Beore the negotiation:

Know what you want rom the negotiation so you can stick toyour goal.


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During the negotiation:Listen.Ask questions that cannot be answered with a simple Yes or No.By asking questions in this way you will have a true discussion.Do not be araid to end the negotiation i you eel pressured intoagreeing to something that doesnt seem right to you.Get your agreement with the creditor or debt collection agencyin writing.

Additional Dos and Donts: Be honest. Do not tell the debt collector that you can pay off the

debt when you cannot, or that you cannot pay the debt when youactually can.

Pay your secured debts rst. Secured debt is debt backed by

property, such as a house or car. However, do not ignore your otherunsecured debts. Make every eort to pay them o as soonas possible.

Do not let a debt collector persuade you to borrow money from ariend or amily member to pay o a debt. Never let a debt collectortalk you into getting urther into debt.

Know your rights and responsibilities under the law.Get additional help (e.g., support person, counselor, lawyer,interpreter) or the negotiation.

I you reach a settlement agreement or decide on a payment plan with adebt collection agency, by law, the debt collection agency must send

you written conrmation o the agreement or plan within ve (5)

business days. Written confrmation must: name the original creditor

name the debt collection agency

name the employee who negotiated the settlement agreement or

payment plan OR the employees supervisor include your name and address

identify the date when the settlement agreement or payment plan

was made list the specic amount and due date of each payment

identify the address where payments should be mailed or otherwise sent

specify any other terms and conditions

I you owe debt to multiple creditors, the debt collection agency mustlist separately: the debt due to each original creditor

the amount to be paid on each debt

how payments will be applied

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Gather all important documents.


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Declaring Bankruptcy

You have a legal right to declare bankruptcy, but should seriously

think about it and explore other options frst. Under the law, i youare considering declaring bankruptcy, you must attend bankruptcy

counseling with a qualifed proessional to learn about all o your

options. To fnd an approved bankruptcy counselor, contact the U.S.

Department o Justice, U.S. Trustee Program at 1-202-514-4100or get Credit Counseling & Debtor Education Inormation online at

www.usdoj.gov/ust/eo/bapcpa/ccde.

How to Take Control o Your Debt

Debt stress? Youre not alone. DCAs Ofce o Financial Empowerment(OFE) can help you take control.

Call 311 (212-NEW-YORK outside NYC) or visit nyc.gov/oe to fnd

a Financial Empowerment Center near you. Financial Empowerment

Centers provide ree one-on-one fnancial counseling by proessional

counselors, in English and Spanish, in person or by phone. You can also

get reerrals to organizations in the Citys Financial Education Network

that oer ree and low-cost fnancial education classes, workshops, and

one-on-one counseling services throughout New York. Online, you can

search a directory o the Financial Education Network by topic, borough,

language, and provider. The OFE Web site also provides extensive re-

sources to help you get, manage, save, and protect your money.

Make sure the written conrmation includes only the terms to

which you agreed. Keep the written confrmation or your records.

Within 21 calendar days o receiving your fnal payment under thesettlement agreement or payment plan, the debt collection agency mustconfrm in writing that the debt is paid in ull and identiy both theoriginal creditor and account number.

I you do not receive written conrmation rom the debt collection

agency or i the correspondence does not refect what you believe

you agreed to, notiy the debt collection agency immediately. You

can also call 311 or visit nyc.gov/consumers to le a complaint

with DCA.

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Beware of Debt Help Scams

Many companies send oers to help you solve all o your debtproblems quickly or a low ee.

Sounds like a good oer, right?

WRONG. Unortunately, i an oer seems too good to be true, itusually is. Many o the companies promising to help you withyour debt problems will actually cause more grie in the long run.Learn how to spot the signs o a scam.

Signs a debt help company is trying to scam you:

It promises to remove all o your debt. Debt does not disap-pear unless you pay it o. Any company that says it can get rido your debt is trying to rip you o.

It encourages you to take out a new loan without reviewing

your nancial situation. Any qualifed lender will need to evaluateyour ability to repay a loan beore it oers you money.

It requests substantial monthly service ees. I youre alreadystruggling with debt payments, you should not add to your ex-penses by paying someone to manage debt that you can repayyoursel or in consultation with a ree or low-cost credit counselor.

It tells you to stop making payments or contacting your lenders.Oten, lenders are willing to work out a repayment plan with you.

I the company tells you not to contact lenders, it might be withhold-ing valuable inormation. I you stop making payments, you maydamage your credit and lessen your lenders willingness to negotiate.

It asks you to sign blank orms or sign over your propertys

ownership. NEVER sign blank paperwork. NEVER sign agree-ments that you dont understand. Remember: I the company isunwilling to explain the paperwork or answer your questions,do not do business with them.

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Important Information about Money that Cannot BeTaken to Pay Judgments

Under State and Federal law, certain money may never be taken bycreditors to satisy judgments. This money is considered exempt

unds. You may choose to use exempt unds to pay a debt you owe,

but a creditor cannot reeze or orcibly take those unds rom you oryour bank account to pay o a debt.

Exempt funds Include:

Supplemental Security Income (SSI)

Social Security retirement Social Security Disability (SSD)

Public assistance (Temporary Assistance for Needy Families, TANF)

Income earned while receiving SSI or public assistance

Disability benets

Workers compensation benets

New York City Civil Courts

Locations and Hours: 1-646-386-5700

Obtain helpul inormation in person at the courthouse or on theWeb: www.courts.state.ny.us/courts/nyc/civil/index.shtml

Represent yoursel in court:

www.courts.state.ny.us/courts/nyc/civil/represent.shtml

Find legal assistance:www.nycourts.gov/courts/nyc/civil/legalassistance.shtml

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Do not ignore a court summons. Consult an attorney, or i youcannot aord one, go to the court clerk and answer the summons

yoursel. I you ignore the summons, the creditor can obtain a courtdecisioncalled a deault judgmentordering you to pay moneywhich may include ees and interest charges in addition to the debtitsel. I a creditor has a judgment against you, that creditor maybe able to take money rom your wages to pay the debt. The boxNew York City Civil Courts (below) includes important inormation.

I a Debt Collector Sues You


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I you reside in one o New York Citys fve boroughs, or i you were

a City resident at the time you were contacted by a debt collection

agency, you can fle a complaint against the debt collection agency with

DCA. To fle a complaint with DCA, call 311 or visit nyc.gov/consumers.

I you reside outside o New York City, you can fle a complaint with

your local consumer protection agency and/or the FTC. To fle a Federal

complaint or or ree inormation rom the FTC on consumer issues, call1-877-FTC-HELP (1-877-382-4357) toll-ree or visit www.tc.gov.

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How to Resolve Complaints

Veterans benets

Black lung benets

Spousal support, maintenance (alimony), or child support

Railroad retirement

Unemployment benets

Note:

Under the Exempt Income Protection Act o 2008, your bank maynever take or reeze the frst $1,740 in your bank or credit union

account to pay a judgment, whether or not your account hasexempt unds.

For more inormation about exempt unds and where to turn whenyou need assistance, visit nyc.gov/consumers and download DebtCollection: Money Judgments and Frozen Bank Accounts, Information

for Consumers.


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The New York City Department o Consumer Aairs ensures that con-sumers and businesses beneft rom a air and vibrant marketplace. Foradditional inormation about the Department, visit nyc.gov/consumers

I you have a consumer-related complaint, call DCA at 311 or (212) NEW-YORK.

New York City employees are not allowed to ask or or accept anything o value, suchas money, gits, or tips or doing their job. To report corruption, contact the New YorkCity Department o Investigation at www.nyc.gov/doi

Debt Collection Guide - New York City (1)

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