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Under the law, which New York Gov. Kathy Hochul signed last November, the state reduces the statute of limitations from six to three years for companies that sue customers for old debts. File Photo by Nadalina/Shutterstock
March 29 (UPI) — New York Attorney General Letitia James warned debt collectors and credit card companies in the state on Tuesday that soon they’ll no longer be allowed to sue customers to settle old debts.
In her warning, James cited a new New York law — the Consumer Credit Fairness Act — and reminded the financial institutions that it takes effect in about a week.
Under the law, which New York Gov. Kathy Hochul signed last November, the state reduces the statute of limitations from six to three years for companies that sue customers for old debts.
James cautioned the companies that she’s ready to enforce the new regulation, which is designed to thwart excessive interest charges and late fees for customers with outstanding debts going back years.
“For too long, debt collectors used unfair and abusive tactics to improperly collect debts,” James said in the statement. “Abusive debt collection practices of the past hurt low- and moderate-income New Yorkers the most and buried them deeper into financial struggles.
“These new regulations will give us stronger tools to protect the most vulnerable New Yorkers from predatory debt collectors.”
The Consumer Credit Fairness Act takes effect April 7.
James sent letters last week to New York’s largest credit companies and collections agencies warning them of the impending change in the law — and calling for them to comply on day one “without excuses.”
The New York attorney general also encouraged residents to contact her office if they believe they have been unfairly targeted concerning a debt.
James also had a warning for consumers. She said those who make a payment before the law kicks in might inadvertently restart the clock for financial companies to sue.
The new law also requires more transparency from debt collectors.
The New York statute comes after a number of similar laws were enacted in other states and at the federal level. They bar things like contacting consumers through a work email address and attempting to collect through social media.
Last week, the three main credit bureaus in the United States — Experian, TransUnion and Equifax — announced changes to reporting medical debts. They said the move is expected to wipe out almost 70% of medical debt for consumers.
