Senate Bill S4398A

2009-2010 Legislative Session

Enacts the "consumer credit fairness act"

download bill text pdf

Archive: Last Bill Status - In Senate Committee Finance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jun 02, 2010	reported and committed to finance
Jan 06, 2010	referred to codes
Jun 18, 2009	print number 4398a
Jun 18, 2009	amend and recommit to codes
Apr 22, 2009	referred to codes

Votes

- Jun 2, 2010 - Codes Committee Vote
  S4398A
  
  Aye
  
  9
  
  Nay
  
  6
  
  Aye with Reservations
  
  1
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  
  0
  - - Codes Committee Vote: Jun 2, 2010
      
      aye (9)
      
      Breslin
      
      Duane
      
      Huntley
      
      Klein
      
      Parker
      
      Perkins
      
      Sampson
      
      Schneiderman
      
      Squadron
      
      nay (6)
      
      Bonacic
      
      DeFrancisco
      
      Flanagan
      
      Golden
      
      Lanza
      
      Volker
      
      aye wr (1)
      
      Saland

Bill Amendments

co-Sponsors

2009-S4398 - Details

See Assembly Version of this Bill:: A7558
Current Committee:: Senate Finance
Law Section:: Civil Practice Law and Rules
Laws Affected:: Amd §§213, 3012, & 3215, amd RR3016 & 3211, add §§214-f, 306-c & 7515, CPLR
Versions Introduced in Other Legislative Sessions:: 2011-2012: S677, A633
2013-2014: S67
2015-2016: S1277
2017-2018: S578

2009-S4398 - Summary

Enacts the "consumer credit fairness act"; establishes a 3 year statute of limitations for commencement of a cause of action arising out of a consumer credit transaction where the defendant is a purchaser, borrower or debtor; establishes a notice of lawsuit which must be mailed to the defendant in such a cause of action; establishes certain requirements for the complaint in such an action

2009-S4398 - Sponsor Memo

                                 BILL NUMBER:  S4398

 TITLE OF BILL :
An act to amend the civil practice law and rules, in relation to
consumer credit transactions


 PURPOSE :
This bill would strengthen consumer protections in consumer debt
collection proceedings.

 SUMMARY OF PROVISIONS :
The bill would require that the complaint 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 plaintiff seeks to
collect. The bill also requires that a copy of the contract be
attached to the complaint.

The bill would reduce the statute of limitations on consumer credit
actions from six years to two years. The bill would also bar debt
collectors from collecting debts on which the statute of limitations
has expired.

It would require an additional notice of a pending consumer credit
action be mailed to the defendant by the clerk of the court. This is

required in New York City and the bill would adopt this simple and
effective requirement statewide.

The bill would permit defendants in consumer credit actions to raise
improper service as a defense in their answer and preserve that
defense for trial without having to file a separate motion to dismiss
within 60 days as under current law.

To prevent the entry of default judgments on claims which have no
merit, the bill would require applications for default judgments in
consumer credit actions to include an affidavit from the original
creditor, together with proof of assignment of the debt if the
plaintiff is not the original creditor. The bill also provides that
default judgment applications will be reviewed by a judge.

 JUSTIFICATION :
Abusive debt collection lawsuits exploit current gaps in our state's
civil procedure laws and rules. The proposed legislation helps to fill
those gaps. It would adopt statewide the additional notice
requirements which are already in place in New York City to ensure
that more New Yorkers will receive actual notice of debt collection
proceedings. It will require court papers to include basic information
about the debt to ensure that New Yorkers will be better able to
identify the debt or account on which they are being sued. To ensure
that default judgment applications in debt collection lawsuits are
evaluated by judges on the merits, it will require proof of the
complaint's allegations to New Yorkers against default judgments on
debts for which the plaintiff does not possess legitimate proof. The
reduction of the statute of limitations on debt collection lawsuits
from six years to two years will encourage creditors to file claims in
a timely manner and better protect New Yorkers from the unfair and
excessive accumulation of interest and fees. The proposed legislation
will protect defendants from unknowingly waiving legitimate defense
that a debt is past the statute of limitations or that they were
improperly served because they do not understand their legal rights.

 LEGISLATIVE HISTORY :
New Bill.

 FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS :
None noted.

 EFFECTIVE DATE :
January 1, after becoming law.

2009-S4398 - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  4398

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                             April 22, 2009
                               ___________

Introduced  by  Sen. SCHNEIDERMAN -- read twice and ordered printed, and
  when printed to be committed to the Committee on Codes

AN ACT to amend the civil practice law and rules, in relation to consum-
  er credit transactions

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Short  title. This act shall be known and may be cited as
the "consumer credit fairness act".
  S 2. Subdivision 2 of section 213 of the civil practice law and rules,
as amended by chapter 709 of the laws of 1988, is  amended  to  read  as
follows:
  2.  an  action  upon a contractual obligation or liability, express or
implied, except as provided in section two  hundred  thirteen-a  OR  TWO
HUNDRED  FOURTEEN-F  of this article or article 2 of the uniform commer-
cial code or article 36-B of the general business law;
  S 3. The civil practice law and rules  is  amended  by  adding  a  new
section 214-f to read as follows:
  S  214-F.  CERTAIN ACTIONS ARISING OUT OF CONSUMER CREDIT TRANSACTIONS
TO BE COMMENCED WITHIN TWO YEARS. AN ACTION ARISING OUT  OF  A  CONSUMER
CREDIT  TRANSACTION WHERE A PURCHASER, BORROWER OR DEBTOR IS A DEFENDANT
MUST BE COMMENCED WITHIN TWO YEARS, EXCEPT AS PROVIDED  IN  SECTION  TWO
HUNDRED  THIRTEEN-A  OF THIS ARTICLE OR ARTICLE 2 OF THE UNIFORM COMMER-
CIAL CODE OR ARTICLE 36-B OF THE GENERAL BUSINESS LAW. WHEN  THE  PERIOD
WITHIN  WHICH AN ACTION MAY BE COMMENCED UNDER THIS SECTION HAS EXPIRED,
THE RIGHT IS EXTINGUISHED AS WELL AS THE REMEDY.
  S 4. The civil practice law and rules  is  amended  by  adding  a  new
section 306-c to read as follows:
  S  306-C.  ADDITIONAL  MAILING OF NOTICE IN AN ACTION ARISING OUT OF A
CONSUMER CREDIT TRANSACTION. 1. AT THE TIME OF FILING WITH THE CLERK  OF
THE  PROOF  OF SERVICE OF THE SUMMONS AND COMPLAINT IN AN ACTION ARISING
OUT OF A CONSUMER CREDIT TRANSACTION, THE PLAINTIFF SHALL SUBMIT TO  THE

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11087-01-9

S. 4398                             2

CLERK  A  STAMPED  ENVELOPE  ADDRESSED  TO THE DEFENDANT TOGETHER WITH A
WRITTEN NOTICE IN CLEAR TYPE OF NO LESS THAN TWELVE-POINT  IN  SIZE,  IN
BOTH ENGLISH AND SPANISH, AND CONTAINING THE FOLLOWING LANGUAGE:
                            NOTICE OF LAWSUIT
(DATE)

(NAME OF COURT)
(COUNTY)
(STREET ADDRESS, ROOM NUMBER)
(CITY, STATE, ZIP CODE)

(NAME OF DEFENDANT)
(ADDRESS OF DEFENDANT)

PLAINTIFF:__________________________________
DEFENDANT:__________________________________
NAME OF ORIGINAL CREDITOR, UNLESS SAME:______________________________
INDEX NUMBER:_______________________________

ATTENTION:  A  LAWSUIT  HAS BEEN FILED AGAINST YOU CLAIMING THAT YOU OWE
MONEY FOR AN UNPAID CREDIT CARD, MEDICAL, STUDENT LOAN OR OTHER DEBT.
YOU SHOULD GO TO THE COURT CLERK'S OFFICE AT THE ABOVE ADDRESS  AS  SOON
AS POSSIBLE TO RESPOND TO THE LAWSUIT. YOU MAY WISH TO CONTACT AN ATTOR-
NEY. IF YOU DO NOT HAVE AN ATTORNEY, HELP IS AVAILABLE AT THE COURT.
IF  YOU  DO  NOT  RESPOND TO THE LAWSUIT, THE COURT MAY ENTER A JUDGMENT
AGAINST YOU. ONCE ENTERED, A JUDGMENT IS VALID  FOR  TWENTY  YEARS,  AND
YOUR  MONEY,  INCLUDING  A PORTION OF YOUR PAYCHECK AND/OR BANK ACCOUNT,
MAY BE TAKEN. ALSO, A JUDGMENT WILL  HURT  YOUR  CREDIT  SCORE  AND  CAN
AFFECT YOUR ABILITY TO RENT A HOME, FIND A JOB, OR TAKE OUT A LOAN.
YOU CANNOT BE ARRESTED OR SENT TO JAIL FOR OWING A DEBT.
IT IS IMPORTANT THAT YOU GO TO THE COURT CLERK'S OFFICE LISTED ABOVE AND
BRING THIS NOTICE WITH YOU.
                            AVISO DE DEMANDA
(FECHA)

(NOMBRE DE LA CORTE)
(CONDADO)
(DOMICILIO, NUMERO DE OFICINA)
(CUIDAD, ESTADO, CODIGO POSTAL)

(NOMBRE DE DEMANDADO)
(DOMICILIO DEL DEMANDADO)

DEMANDANTE:___________________________________
DEMANDADO:____________________________________
NOMBRE DEL ACREEDOR, SI NO ES EL MISMO:_______
NUMERO DE INDICE:_____________________________

ATENCION:  UNA  DEMANDA HA SIDO PRESENTADA EN CONTRA SUYA RECLAMANDO QUE
USTED DEBE DINERO PARA UNA DEUDA DE TARJETA DE CREDITO, MEDICO,  PRESTA-
MOS ESTUDIANTILES, O OTRAS DEUDAS.
USTED  DEBE  IR  A  LA OFICINA DEL SECRETARIO DE LA CORTE A LA DIRECCION
INDICADA ARRIBA LO ANTES POSIBLE PARA RESPONDER A LA DEMANDA.  SI  USTED
DESEA,  PUEDE  CONTACTAR UN ABOGADO. SI USTED NO TIENE UN ABOGADO, AYUDA
ESTA DISPONIBLE EN LA CORTE.

S. 4398                             3

SI USTED NO RESPONDE A LA DEMANDA, LA CORTE PUEDE EXPEDIR UN  JUICIO  EN
CONTRA  SUYA.  UNA  VEZ QUE HAYA SIDO DECLARADO, UN JUICIO ESTARA VALIDO
POR VEINTE ANOS, Y SU DINERO, INCLUYENDO UNA PARTE  DE  SU  SALARIO  Y/O
CUENTAS  BANCARIAS  PUEDEN SER EMBARGADAS. INCLUSO, UN JUICIO VA A DANAR
SU HISTORIAL DE CREDITO Y PUEDE AFECTAR SU CAPACIDAD DE RENTAR UN HOGAR,
BUSCAR UN TRABAJO, O SACAR UN PRESTAMO.
USED NO PUEDE SER ARRESTADO NI METIDO EN LA CARCEL POR DEBER UNA DEUDA.
ES  IMPORTANTE  QUE  USTED  VAYA A LA OFICINA DEL SECRETARIO DE LA CORTE
MENCIONADA ARRIBA Y LLEVE ESTA AVISO CON USTED.
  2. THE FACE OF THE ENVELOPE SHALL BE ADDRESSED TO THE DEFENDANT AT THE
ADDRESS AT WHICH PROCESS WAS SERVED, AND SHALL CONTAIN  THE  DEFENDANT'S
NAME, ADDRESS (INCLUDING APARTMENT NUMBER) AND ZIP CODE. THE FACE OF THE
ENVELOPE  ALSO  SHALL STATE THE APPROPRIATE CLERK'S OFFICE AS ITS RETURN
ADDRESS.
  3. THE CLERK  PROMPTLY  SHALL  MAIL  TO  THE  DEFENDANT  THE  ENVELOPE
CONTAINING  THE  ADDITIONAL  NOTICE SET FORTH IN SUBDIVISION ONE OF THIS
SECTION. NO DEFAULT JUDGMENT BASED ON THE DEFENDANT'S FAILURE TO  ANSWER
SHALL BE ENTERED UNLESS THERE HAS BEEN COMPLIANCE WITH THIS SECTION, AND
AT LEAST TWENTY DAYS HAVE ELAPSED FROM THE DATE OF MAILING BY THE CLERK.
  S  5.  Subdivision  (a)  of section 3012 of the civil practice law and
rules is amended to read as follows:
  (a) Service of  pleadings.  The  complaint  may  be  served  with  the
summons, EXCEPT THAT IN AN ACTION ARISING OUT OF A CONSUMER CREDIT TRAN-
SACTION,  THE  COMPLAINT  SHALL BE SERVED WITH THE SUMMONS. A subsequent
pleading asserting new or additional claims for relief shall  be  served
upon  a party who has not appeared in the manner provided for service of
a summons. In any other case, a pleading shall be served in  the  manner
provided  for service of papers generally. Service of an answer or reply
shall be made within twenty days after service of the pleading to  which
it responds.
  S  6.    Rule  3016  of the civil practice law and rules is amended by
adding a new subdivision (i) to read as follows:
  (I) CONSUMER CREDIT TRANSACTIONS. IN  AND  ACTION  ARISING  OUT  OF  A
CONSUMER  CREDIT  TRANSACTION WHERE A PURCHASER, BORROWER OR DEBTOR IS A
DEFENDANT, THE CONTRACT OR OTHER WRITTEN INSTRUMENT ON WHICH THE  ACTION
IS  BASED  SHALL BE ATTACHED TO THE COMPLAINT AND THE FOLLOWING INFORMA-
TION SHALL BE SET FORTH IN THE COMPLAINT:
  1. THE NAME OF THE ORIGINAL CREDITOR;
  2. THE LAST FOUR DIGITS OF THE ORIGINAL ACCOUNT NUMBER;
  3. THE DATE AND AMOUNT OF THE LAST PAYMENT;
  4. IF THE COMPLAINT CONTAINS A CAUSE OF ACTION  BASED  ON  AN  ACCOUNT
STATED,  THE  DATE THAT THE FINAL STATEMENT OF ACCOUNT WAS MAILED TO THE
DEFENDANT;
  5. AN ITEMIZATION OF THE AMOUNT SOUGHT, BY (I) PRINCIPAL; (II) FINANCE
CHARGE OR CHARGES; (III) FEES IMPOSED BY  THE  ORIGINAL  CREDITOR;  (IV)
COLLECTION  COSTS;  (V)  ATTORNEY'S  FEES;  (VI) INTEREST; AND (VII) ANY
OTHER FEES AND CHARGES. THE TERM "FINANCE CHARGE" MEANS A FINANCE CHARGE
AS DEFINED IN REGULATION Z, 12 C.F.R. S 226.4.
  6. WHETHER THE PLAINTIFF IS THE ORIGINAL CREDITOR. IF THE PLAINTIFF IS
NOT THE ORIGINAL CREDITOR, THE COMPLAINT SHALL STATE  (I)  THE  DATE  ON
WHICH  THE DEBT WAS ASSIGNED TO THE PLAINTIFF; AND (II) THE NAME OF EACH
PREVIOUS OWNER OF THE ACCOUNT  AND  THE  DATE  ON  WHICH  THE  DEBT  WAS
ASSIGNED TO THAT OWNER.
  7.  ANY  MATTERS  REQUIRED TO BE STATED WITH PARTICULARITY PURSUANT TO
RULE 3015 OF THIS ARTICLE.

S. 4398                             4

  S 7. Subdivision (e) of rule 3211 of the civil practice law and rules,
as amended by chapter 616 of the laws of 2005, is  amended  to  read  as
follows:
  (e)  Number,  time  and waiver of objections; motion to plead over. At
any time before service of the responsive pleading is required, a  party
may  move  on one or more of the grounds set forth in subdivision (a) OF
THIS SECTION, and no more than one such motion shall be  permitted.  Any
objection  or  defense  based upon a ground set forth in paragraphs one,
three, four, five and six of subdivision (a) OF THIS SECTION  is  waived
unless  raised  either  by  such motion or in the responsive pleading. A
motion based upon a ground specified in paragraph two, seven or  ten  of
subdivision (a) OF THIS SECTION may be made at any subsequent time or in
a  later  pleading,  if  one  is  permitted; IN ANY ACTION OTHER THAN AN
ACTION ARISING OUT OF A CONSUMER CREDIT TRANSACTION WHERE  A  PURCHASER,
BORROWER  OR  DEBTOR  IS  A DEFENDANT, an objection that the summons and
complaint, summons with notice, or notice of petition and  petition  was
not  properly  served is waived if, having raised such an objection in a
pleading, the objecting party does not move for judgment on that  ground
within  sixty  days after serving the pleading, unless the court extends
the time upon the ground of undue hardship. The foregoing sentence shall
not apply in any proceeding under subdivision  one  or  two  of  section
seven  hundred  eleven of the real property actions and proceedings law.
The papers in opposition to a motion based  on  improper  service  shall
contain a copy of the proof of service, whether or not previously filed.
An objection based upon a ground specified in paragraph eight or nine of
subdivision (a) OF THIS SECTION is waived if a party moves on any of the
grounds  set  forth  in  subdivision (a) OF THIS SECTION without raising
such objection or if, having made no objection under subdivision (a)  OF
THIS  SECTION, he or she does not raise such objection in the responsive
pleading.
  S 8. Subdivisions (a) and (f) of section 3215 of  the  civil  practice
law  and rules, subdivision (a) as amended by chapter 749 of the laws of
1965 and subdivision (f) as amended by chapter 453 of the laws of  2006,
are amended to read as follows:
  (a) Default and entry. When a defendant has failed to appear, plead or
proceed  to trial of an action reached and called for trial, or when the
court orders a dismissal for any other neglect to proceed, the plaintiff
may seek a default judgment against him. If the plaintiff's claim is for
a sum certain or for a sum which can by  computation  be  made  certain,
application  may be made to the clerk within one year after the default.
The clerk, upon submission of the requisite proof, shall enter  judgment
for  the amount demanded in the complaint or stated in the notice served
pursuant to subdivision (b) of rule 305 OF THIS CHAPTER, plus costs  and
interest. Upon entering a judgment against less than all defendants, the
clerk  shall  also enter an order severing the action as to them. When a
plaintiff has failed to proceed to trial of an action reached and called
for trial, or when the court orders a dismissal for any other neglect to
proceed, the defendant may make application to the clerk within one year
after the default and the clerk, upon submission of the requisite proof,
shall enter judgment for costs. Where the case is not one in  which  the
clerk  can  enter  judgment,  the plaintiff shall apply to the court for
judgment.  IN AN ACTION ARISING OUT OF  A  CONSUMER  CREDIT  TRANSACTION
WHERE  A  PURCHASER,  BORROWER OR DEBTOR IS A DEFENDANT, JUDGMENT MAY BE
ENTERED ONLY PURSUANT TO SUBDIVISION (B) OF THIS SECTION.
  (f) Proof. On any application for judgment by default,  the  applicant
shall  file  proof  of  service  of  the summons and the complaint, or a

S. 4398                             5

summons and notice served pursuant to subdivision (b)  of  rule  305  or
subdivision  (a)  of  rule  316  of this chapter, and proof of the facts
constituting the claim, the default and the amount due by affidavit made
by  the party, or where the state of New York is the plaintiff, by affi-
davit made by an attorney from the office of the  attorney  general  who
has  or  obtains knowledge of such facts through review of state records
or otherwise. Where a verified complaint has been served, it may be used
as the affidavit of the facts constituting the claim and the amount due;
in such case, an affidavit as to the default shall be made by the  party
or  the  party's attorney. IN AN ACTION ARISING OUT OF A CONSUMER CREDIT
TRANSACTION, IF THE PLAINTIFF IS NOT THE ORIGINAL CREDITOR,  THE  APPLI-
CANT  SHALL INCLUDE AN AFFIDAVIT FROM THE ORIGINAL CREDITOR OF THE FACTS
CONSTITUTING THE DEBT CLAIMED, TOGETHER WITH THE PROOF OF ANY SUBSEQUENT
ASSIGNMENT OR ASSIGNMENTS. When jurisdiction is based on  an  attachment
of property, the affidavit must state that an order of attachment grant-
ed  in  the  action  has  been  levied on the property of the defendant,
describe the property and state its value. Proof of mailing  the  notice
required  by  subdivision  (g)  of this section, where applicable, shall
also be filed.
  S 9. The civil practice law and rules  is  amended  by  adding  a  new
section 7515 to read as follows:
  S  7515.  CONFIRMATION  OF  AN AWARD BASED ON A CONSUMER CREDIT TRANS-
ACTION. IN ANY PROCEEDING UNDER SECTION 7510 OF THIS ARTICLE TO  CONFIRM
AN  AWARD  BASED  ON A CONSUMER CREDIT TRANSACTION, THE PARTY SEEKING TO
CONFIRM THE AWARD SHALL PLEAD THE ACTUAL TERMS  AND  CONDITIONS  OF  THE
AGREEMENT  TO  ARBITRATE. THE PARTY SHALL ATTACH TO ITS PETITION (1) THE
AGREEMENT TO ARBITRATE; (2) THE DEMAND  FOR  ARBITRATION  OR  NOTICE  OF
INTENTION  TO  ARBITRATE, WITH PROOF OF SERVICE; AND (3) THE ARBITRATION
AWARD, WITH PROOF OF SERVICE. IF THE AWARD DOES NOT CONTAIN A  STATEMENT
OF THE CLAIMS SUBMITTED FOR ARBITRATION, OF THE CLAIMS RULED UPON BY THE
ARBITRATOR,  AND OF THE CALCULATION OF FIGURES USED BY THE ARBITRATOR IN
ARRIVING AT THE AWARD, THEN THE PETITION SHALL CONTAIN SUCH A STATEMENT.
THE COURT SHALL NOT GRANT CONFIRMATION OF AN AWARD BASED ON  A  CONSUMER
CREDIT  TRANSACTION  UNLESS  THE  PARTY SEEKING TO CONFIRM THE AWARD HAS
COMPLIED WITH THIS SECTION.
  S 10. This act shall take effect on the first of January next succeed-
ing the date on which it shall have become a law.

co-Sponsors

View additional co-sponsors

2009-S4398A (ACTIVE) - Details

See Assembly Version of this Bill:: A7558
Current Committee:: Senate Finance
Law Section:: Civil Practice Law and Rules
Laws Affected:: Amd §§213, 3012, & 3215, amd RR3016 & 3211, add §§214-f, 306-c & 7515, CPLR
Versions Introduced in Other Legislative Sessions:: 2011-2012: S677, A633
2013-2014: S67
2015-2016: S1277
2017-2018: S578

2009-S4398A (ACTIVE) - Summary

2009-S4398A (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S4398A

 TITLE OF BILL :  An act to amend the civil practice law and rules, in
relation to consumer credit transactions

 PURPOSE OF BILL :  This bill would strengthen consumer protections in
consumer debt collection proceedings.

 SUMMARY OF PROVISIONS OF BILL :  The bill would require that the
complaint in consumer credit actions 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 plaintiff seeks to collect. The
bill also requires that a copy of the contract be attached to the
complaint.

The bill would reduce the statute of limitations on consumer credit
actions from six years to three years. The bill would also bar debt
collectors from collecting debts on which the statute of limitations
has expired.

It would require that an additional notice of a pending consumer
credit action be mailed to the defendant by the clerk of the court.
This is required in New York City and the bill would adopt this
requirement statewide.

The bill would permit defendants in consumer credit actions to raise
improper service as a defense in their answer and preserve that
defense for trial without having to file a separate motion to dismiss
within 60 days as under current law.

To prevent the entry of default judgments on claims which have no
merit, the bill would require applications for default judgments in
consumer credit actions to include specific pleading requirements.
These include an affidavit by the original creditor of the facts
constituting the debt, the default in payment, the sale or assignment
of the debt, and the amount due at the time of sale or assignment;
(ii) for each subsequent assignment or sale of the debt to another
entity, an affidavit of sale of the debt by the debt seller, completed
by the seller or assignor; and (iii) an affidavit of a witness of the
plaintiff, which includes a chain of title of the debt, completed by
the plaintiff or plaintiff's witness. The bill will also require that
applications for default judgments in consumer credit actions to
include a statement that after reasonable inquiry, the creditor has
reason to believe that the statute of limitations has not expired.

 JUSTIFICATION :  Abusive debt collection lawsuits exploit current
gaps in our state's civil procedure laws and rules. The proposed
legislation helps to fill those gaps.

It will reduce the statute of limitations for consumer credit actions
from six to three years. States with three year statutes of limitation
include: Arizona, Arkansas, Delaware, Kansas, Louisiana, Maryland,
Mississippi, Montana, and the District of Columbia.  Pennsylvania has
a two year statute of limitation. The public purpose for reducing the
statute of limitation is to require creditors to reduce their claims
to judgment while memories are fresh and records are still available.
The bill would also extinguish the right to collect the debt after the
statute of limitation has expired. This is a reaction to the now
common practice of selling time-barred debt.  States with similar
requirements include Wisconsin and Mississippi.

It would adopt statewide the additional notice requirements which are
already in place in New York City to ensure that more New Yorkers
receive actual notice of debt collection actions. It will require
court papers to include basic information about the debt to ensure
that New Yorkers will be better able to identify the debt or account
on which they are being sued. This notice requirement will be sent in
both English and Spanish. The requirement that certain notices be
bilingual can be found in other areas of New York Law including
Section 812(5) of the Family Court Act; Section 530.11(6) of the
Criminal Procedure Law; Section 1803-A(c) of the New York City Civil
Court Act and Section 401(d) of the New York City Civil Court Act.

To ensure that default judgment applications in debt collection
lawsuits are evaluated on the merits, it will require proof of the
complaint's allegations to be submitted as part of the application for
a default judgment to protect New Yorkers against default judgments on
debts for which the plaintiff does not possess the requisite proof.

The proposed legislation will protect defendants from unknowingly
waiving the legitimate defense that a debt is past the statute of
limitations or that they were improperly served. The public purpose
for preventing the waiver is that debt collection actions are rife
with poor service and default judgments which were obtained after the
statute of limitations had expired. To address the latter problem, the
bill will require that applications for default judgments in consumer
credit actions include a statement that the creditor has reason to
believe that the statute of limitations has not expired.  Since over
300,000 default judgments were entered in the New York City Civil
Court last year, this common sense pleading requirement will now be
required.

 LEGISLATIVE HISTORY :  New bill.

 FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS :  None noted.

 EFFECTIVE DATE :  January 1, after becoming law. Section three of the
bill, which shortens the statute of limitations, will take effect 180
days after becoming law.

2009-S4398A (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 4398--A

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                             April 22, 2009
                               ___________

Introduced by Sens. SCHNEIDERMAN, HASSELL-THOMPSON, KRUEGER, MONSERRATE,
  PARKER  --  read  twice  and  ordered  printed, and when printed to be
  committed to the Committee on  Codes  --  committee  discharged,  bill
  amended,  ordered reprinted as amended and recommitted to said commit-
  tee

AN ACT to amend the civil practice law and rules, in relation to consum-
  er credit transactions

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Short  title. This act shall be known and may be cited as
the "consumer credit fairness act".
  S 2. Subdivision 2 of section 213 of the civil practice law and rules,
as amended by chapter 709 of the laws of 1988, is  amended  to  read  as
follows:
  2.  an  action  upon a contractual obligation or liability, express or
implied, except as provided in section two  hundred  thirteen-a  OR  TWO
HUNDRED  FOURTEEN-F  of this article or article 2 of the uniform commer-
cial code or article 36-B of the general business law;
  S 3. The civil practice law and rules  is  amended  by  adding  a  new
section 214-f to read as follows:
  S  214-F.  CERTAIN ACTIONS ARISING OUT OF CONSUMER CREDIT TRANSACTIONS
TO BE COMMENCED WITHIN THREE YEARS. AN ACTION ARISING OUT OF A  CONSUMER
CREDIT  TRANSACTION WHERE A PURCHASER, BORROWER OR DEBTOR IS A DEFENDANT
MUST BE COMMENCED WITHIN THREE YEARS, EXCEPT AS PROVIDED IN SECTION  TWO
HUNDRED  THIRTEEN-A  OF THIS ARTICLE OR ARTICLE 2 OF THE UNIFORM COMMER-
CIAL CODE OR ARTICLE 36-B OF THE GENERAL BUSINESS LAW. WHEN  THE  PERIOD
WITHIN  WHICH AN ACTION MAY BE COMMENCED UNDER THIS SECTION HAS EXPIRED,
THE RIGHT TO COLLECT CONSUMER CREDIT DEBT IS EXTINGUISHED AS WELL AS THE
REMEDY.
  FOR PURPOSES OF THIS SECTION, "THE RIGHT TO  COLLECT  CONSUMER  CREDIT
DEBT" SHALL MEAN ANY ATTEMPTS BY THE CREDITOR, THIRD PARTY PURCHASER, OR

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11087-05-9

S. 4398--A                          2

OTHER  AUTHORIZED  THIRD  PARTY  TO COLLECT SUCH DEBT INCLUDING, BUT NOT
LIMITED TO, CALLS, MAIL OR OTHER ATTEMPTS TO COLLECT.
  S  4.  The  civil  practice  law  and rules is amended by adding a new
section 306-c to read as follows:
  S 306-C. ADDITIONAL MAILING OF NOTICE IN AN ACTION ARISING  OUT  OF  A
CONSUMER  CREDIT TRANSACTION. 1. AT THE TIME OF FILING WITH THE CLERK OF
THE PROOF OF SERVICE OF THE SUMMONS AND COMPLAINT IN AN  ACTION  ARISING
OUT  OF A CONSUMER CREDIT TRANSACTION, THE PLAINTIFF SHALL SUBMIT TO THE
CLERK A STAMPED ENVELOPE ADDRESSED TO  THE  DEFENDANT  TOGETHER  WITH  A
WRITTEN  NOTICE  IN  CLEAR TYPE OF NO LESS THAN TWELVE-POINT IN SIZE, IN
BOTH ENGLISH AND SPANISH, AND CONTAINING THE FOLLOWING LANGUAGE:
                            NOTICE OF LAWSUIT
(DATE)

(NAME OF COURT)
(COUNTY)
(STREET ADDRESS, ROOM NUMBER)
(CITY, STATE, ZIP CODE)

(NAME OF DEFENDANT)
(ADDRESS OF DEFENDANT)

PLAINTIFF:__________________________________
DEFENDANT:__________________________________
NAME OF ORIGINAL CREDITOR, UNLESS SAME:______________________________
INDEX NUMBER:_______________________________

ATTENTION: A LAWSUIT HAS BEEN FILED AGAINST YOU CLAIMING  THAT  YOU  OWE
MONEY FOR AN UNPAID CREDIT CARD, MEDICAL, STUDENT LOAN OR OTHER DEBT.
YOU  SHOULD  GO TO THE COURT CLERK'S OFFICE AT THE ABOVE ADDRESS AS SOON
AS POSSIBLE TO RESPOND TO THE LAWSUIT. YOU MAY WISH TO CONTACT AN ATTOR-
NEY. IF YOU DO NOT HAVE AN ATTORNEY, HELP IS AVAILABLE AT THE COURT.
IF YOU DO NOT RESPOND TO THE LAWSUIT, THE COURT  MAY  ENTER  A  JUDGMENT
AGAINST  YOU.  ONCE  ENTERED, A JUDGMENT IS GOOD AND CAN BE USED AGAINST
YOU FOR TWENTY YEARS, AND  YOUR  MONEY,  INCLUDING  A  PORTION  OF  YOUR
PAYCHECK  AND/OR  BANK ACCOUNT, MAY BE TAKEN. ALSO, A JUDGMENT WILL HURT
YOUR CREDIT SCORE AND CAN AFFECT YOUR ABILITY TO RENT  A  HOME,  FIND  A
JOB, OR TAKE OUT A LOAN.
YOU CANNOT BE ARRESTED OR SENT TO JAIL FOR OWING A DEBT.
IT IS IMPORTANT THAT YOU GO TO THE COURT CLERK'S OFFICE LISTED ABOVE AND
BRING  THIS NOTICE WITH YOU.  ADDITIONAL INFORMATION CAN BE FOUND AT THE
COURT SYSTEM WEBSITE AT:  WWW.COURTS.STATE.NY.US
  2. THE FACE OF THE ENVELOPE SHALL BE ADDRESSED TO THE DEFENDANT AT THE
ADDRESS AT WHICH PROCESS WAS SERVED, AND SHALL CONTAIN  THE  DEFENDANT'S
NAME, ADDRESS (INCLUDING APARTMENT NUMBER) AND ZIP CODE. THE FACE OF THE
ENVELOPE  ALSO  SHALL STATE THE APPROPRIATE CLERK'S OFFICE AS ITS RETURN
ADDRESS.
  3. THE CLERK  PROMPTLY  SHALL  MAIL  TO  THE  DEFENDANT  THE  ENVELOPE
CONTAINING  THE  ADDITIONAL  NOTICE SET FORTH IN SUBDIVISION ONE OF THIS
SECTION. NO DEFAULT JUDGMENT BASED ON THE DEFENDANT'S FAILURE TO  ANSWER
SHALL BE ENTERED UNLESS THERE HAS BEEN COMPLIANCE WITH THIS SECTION, AND
AT LEAST TWENTY DAYS HAVE ELAPSED FROM THE DATE OF MAILING BY THE CLERK.
  S  5.  Subdivision  (a)  of section 3012 of the civil practice law and
rules is amended to read as follows:
  (a) Service of  pleadings.  The  complaint  may  be  served  with  the
summons, EXCEPT THAT IN AN ACTION ARISING OUT OF A CONSUMER CREDIT TRAN-

S. 4398--A                          3

SACTION,  THE  COMPLAINT  SHALL BE SERVED WITH THE SUMMONS. A subsequent
pleading asserting new or additional claims for relief shall  be  served
upon  a party who has not appeared in the manner provided for service of
a  summons.  In any other case, a pleading shall be served in the manner
provided for service of papers generally. Service of an answer or  reply
shall  be made within twenty days after service of the pleading to which
it responds.
  S 6.  Rule 3016 of the civil practice law  and  rules  is  amended  by
adding a new subdivision (i) to read as follows:
  (I)  CONSUMER  CREDIT  TRANSACTIONS.  IN  AN  ACTION  ARISING OUT OF A
CONSUMER CREDIT TRANSACTION WHERE A PURCHASER, BORROWER OR DEBTOR  IS  A
DEFENDANT,  THE CONTRACT OR OTHER WRITTEN INSTRUMENT ON WHICH THE ACTION
IS BASED SHALL BE ATTACHED TO THE COMPLAINT AND THE  FOLLOWING  INFORMA-
TION SHALL BE SET FORTH IN THE COMPLAINT:
  1. THE NAME OF THE ORIGINAL CREDITOR;
  2. THE LAST FOUR DIGITS OF THE ORIGINAL ACCOUNT NUMBER;
  3. THE DATE AND AMOUNT OF THE LAST PAYMENT;
  4.  IF  THE  COMPLAINT  CONTAINS A CAUSE OF ACTION BASED ON AN ACCOUNT
STATED, THE DATE THAT THE FINAL STATEMENT OF ACCOUNT WAS MAILED  TO  THE
DEFENDANT;
  5. AN ITEMIZATION OF THE AMOUNT SOUGHT, BY (I) PRINCIPAL; (II) FINANCE
CHARGE  OR  CHARGES;  (III)  FEES IMPOSED BY THE ORIGINAL CREDITOR; (IV)
COLLECTION COSTS; (V) ATTORNEY'S FEES;  (VI)  INTEREST;  AND  (VII)  ANY
OTHER FEES AND CHARGES. THE TERM "FINANCE CHARGE" MEANS A FINANCE CHARGE
AS DEFINED IN REGULATION Z, 12 C.F.R. S 226.4.
  6. WHETHER THE PLAINTIFF IS THE ORIGINAL CREDITOR. IF THE PLAINTIFF IS
NOT  THE  ORIGINAL  CREDITOR,  THE COMPLAINT SHALL STATE (I) THE DATE ON
WHICH THE DEBT WAS ASSIGNED TO THE PLAINTIFF; AND (II) THE NAME OF  EACH
PREVIOUS  OWNER  OF  THE  ACCOUNT  AND  THE  DATE  ON WHICH THE DEBT WAS
ASSIGNED TO THAT OWNER.
  7. ANY MATTERS REQUIRED TO BE STATED WITH  PARTICULARITY  PURSUANT  TO
RULE 3015 OF THIS ARTICLE.
  S 7. Subdivision (e) of rule 3211 of the civil practice law and rules,
as  amended  by  chapter  616 of the laws of 2005, is amended to read as
follows:
  (e) Number, time and waiver of objections; motion to  plead  over.  At
any  time before service of the responsive pleading is required, a party
may move on one or more of the grounds set forth in subdivision  (a)  OF
THIS  SECTION,  and no more than one such motion shall be permitted. Any
objection or defense based upon a ground set forth  in  paragraphs  one,
three,  four,  five and six of subdivision (a) OF THIS SECTION is waived
unless raised either by such motion or in  the  responsive  pleading.  A
motion  based  upon a ground specified in paragraph two, seven or ten of
subdivision (a) OF THIS SECTION may be made at any subsequent time or in
a later pleading, if one is permitted;  IN  ANY  ACTION  OTHER  THAN  AN
ACTION  ARISING  OUT OF A CONSUMER CREDIT TRANSACTION WHERE A PURCHASER,
BORROWER OR DEBTOR IS A DEFENDANT, an objection  that  the  summons  and
complaint,  summons  with notice, or notice of petition and petition was
not properly served is waived if, having raised such an objection  in  a
pleading,  the objecting party does not move for judgment on that ground
within sixty days after serving the pleading, unless the  court  extends
the time upon the ground of undue hardship. The foregoing sentence shall
not  apply  in  any  proceeding  under subdivision one or two of section
seven hundred eleven of the real property actions and  proceedings  law.
The  papers  in  opposition  to a motion based on improper service shall
contain a copy of the proof of service, whether or not previously filed.

S. 4398--A                          4

An objection based upon a ground specified in paragraph eight or nine of
subdivision (a) OF THIS SECTION is waived if a party moves on any of the
grounds set forth in subdivision (a) OF  THIS  SECTION  without  raising
such  objection or if, having made no objection under subdivision (a) OF
THIS SECTION, he or she does not raise such objection in the  responsive
pleading.
  S  8.  Subdivision  (f)  of section 3215 of the civil practice law and
rules, as amended by chapter 453 of the laws of 2006, is amended  and  a
new subdivision (j) is added to read as follows:
  (f)  Proof.  On any application for judgment by default, the applicant
shall file proof of service of the  summons  and  the  complaint,  or  a
summons  and  notice  served  pursuant to subdivision (b) of rule 305 or
subdivision (a) of rule 316 of this chapter,  and  proof  of  the  facts
constituting the claim, the default and the amount due by affidavit made
by  the party, or where the state of New York is the plaintiff, by affi-
davit made by an attorney from the office of the  attorney  general  who
has  or  obtains knowledge of such facts through review of state records
or otherwise. Where a verified complaint has been served, it may be used
as the affidavit of the facts constituting the claim and the amount due;
in such case, an affidavit as to the default shall be made by the  party
or  the  party's attorney. IN AN ACTION ARISING OUT OF A CONSUMER CREDIT
TRANSACTION, IF THE PLAINTIFF IS NOT THE ORIGINAL CREDITOR,  THE  APPLI-
CANT  SHALL  INCLUDE:  (I)  AN AFFIDAVIT BY THE ORIGINAL CREDITOR OF THE
FACTS CONSTITUTING THE DEBT, THE DEFAULT IN PAYMENT, THE SALE OR ASSIGN-
MENT OF THE DEBT, AND THE AMOUNT DUE AT THE TIME OF SALE OR  ASSIGNMENT;
(II) FOR EACH SUBSEQUENT ASSIGNMENT OR SALE OF THE DEBT TO ANOTHER ENTI-
TY,  AN  AFFIDAVIT  OF SALE OF THE DEBT BY THE DEBT SELLER, COMPLETED BY
THE SELLER OR ASSIGNOR; AND (III) AN  AFFIDAVIT  OF  A  WITNESS  OF  THE
PLAINTIFF, WHICH INCLUDES A CHAIN OF TITLE OF THE DEBT, COMPLETED BY THE
PLAINTIFF  OR  PLAINTIFF'S  WITNESS.  When  jurisdiction  is based on an
attachment of property, the  affidavit  must  state  that  an  order  of
attachment  granted in the action has been levied on the property of the
defendant, describe the property and state its value. Proof  of  mailing
the  notice  required by subdivision (g) of this section, where applica-
ble, shall also be filed.
  (J) A REQUEST FOR A DEFAULT JUDGMENT ENTERED BY  THE  CLERK,  MUST  BE
ACCOMPANIED BY AN AFFIDAVIT BY THE DEBT COLLECTOR (WHO MAY BE THE PLAIN-
TIFF  OR PLAINTIFF'S ATTORNEY) STATING THAT AFTER REASONABLE INQUIRY, HE
OR SHE HAS REASON TO BELIEVE THAT THE STATUTE  OF  LIMITATIONS  HAS  NOT
EXPIRED.
  S  9.  The  civil  practice  law  and rules is amended by adding a new
section 7515 to read as follows:
  S 7515. CONFIRMATION OF AN AWARD BASED ON  A  CONSUMER  CREDIT  TRANS-
ACTION.  IN ANY PROCEEDING UNDER SECTION 7510 OF THIS ARTICLE TO CONFIRM
AN AWARD BASED ON A CONSUMER CREDIT TRANSACTION, THE  PARTY  SEEKING  TO
CONFIRM  THE  AWARD  SHALL  PLEAD THE ACTUAL TERMS AND CONDITIONS OF THE
AGREEMENT TO ARBITRATE. THE PARTY SHALL ATTACH TO ITS PETITION  (1)  THE
AGREEMENT  TO  ARBITRATE;  (2)  THE  DEMAND FOR ARBITRATION OR NOTICE OF
INTENTION TO ARBITRATE, WITH PROOF OF SERVICE; AND (3)  THE  ARBITRATION
AWARD,  WITH PROOF OF SERVICE. IF THE AWARD DOES NOT CONTAIN A STATEMENT
OF THE CLAIMS SUBMITTED FOR ARBITRATION, OF THE CLAIMS RULED UPON BY THE
ARBITRATOR, AND OF THE CALCULATION OF FIGURES USED BY THE ARBITRATOR  IN
ARRIVING AT THE AWARD, THEN THE PETITION SHALL CONTAIN SUCH A STATEMENT.
THE  COURT  SHALL NOT GRANT CONFIRMATION OF AN AWARD BASED ON A CONSUMER
CREDIT TRANSACTION UNLESS THE PARTY SEEKING TO  CONFIRM  THE  AWARD  HAS
COMPLIED WITH THIS SECTION.

S. 4398--A                          5

  S 10. This act shall take effect on the first of January next succeed-
ing  the  date  on which it shall have become a law, except that section
three of this act shall take effect on the  one  hundred  eightieth  day
after this act shall have become a law.

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Senate Bill S4398A

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Archive: Last Bill Status - In Senate Committee Finance Committee

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