NY State Senate Bill S1277A

Archive: Last Bill Status - In Senate Committee Judiciary Committee

Introduced
In Committee
On Floor Calendar
- Passed Senate
- Passed Assembly
Delivered to Governor
Signed/Vetoed by Governor

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Actions

view actions (4)

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 12, 2016	print number 1277a
Jan 12, 2016	amend and recommit to judiciary
Jan 06, 2016	referred to judiciary
Jan 09, 2015	referred to judiciary

Bill Amendments

Original

A (Active)

Original

A (Active)

S1277 - Details

Current Committee:: Senate Judiciary
Law Section:: Civil Practice Law and Rules
Laws Affected:: Amd §§213, 3012 & 3215, RR3016 & 3211, add §§214-f, 306-d & 7515, CPLR
Versions Introduced in Other Legislative Sessions:: 2009-2010: S4398
2011-2012: S677
2013-2014: S67
2017-2018: S578

S1277 - 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… (view more) provides for arbitration of such actions; requires debt collectors to send consumers a written notice of their rights under state law along with their initial debt collection correspondence; such notice would contain information such as who and when a principal creditor may contact a debtor about the debt owed as well as the fact that a principal creditor cannot disclose information affecting a consumer debtor's reputation for creditworthiness if the principal creditor knows or has reason to know such information is false; applies to consumer rather than commercial debts.

S1277 - Sponsor Memo

BILL NUMBER:S1277

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

PURPOSE OF THE 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 plaintiffs 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.

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.

LEGISLATIVE HISTORY:  2013-2014 - S.67 2011-12: S.677-A 2009: S.4398-A
Referred to Codes

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.

S1277 - Bill Text download pdf

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

                                  1277

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                             January 9, 2015
                               ___________

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

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 TWO OF THE UNIFORM COMMER-
CIAL  CODE OR ARTICLE THIRTY-SIX-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
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-d to read as follows:
  S  306-D.  ADDITIONAL  MAILING OF NOTICE IN AN ACTION ARISING OUT OF A
CONSUMER CREDIT TRANSACTION. 1. AT THE TIME OF FILING WITH THE CLERK  OF

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD00386-01-5

S. 1277                             2

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-
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

S. 1277                             3

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 THREE THOUSAND FIFTEEN 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.
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

S. 1277                             4

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) AFFIDAVIT.  A REQUEST FOR A DEFAULT JUDGMENT ENTERED BY THE CLERK,
MUST BE ACCOMPANIED BY AN AFFIDAVIT BY THE DEBT COLLECTOR  (WHO  MAY  BE
THE  PLAINTIFF  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 SEVEN THOUSAND FIVE HUNDRED  TEN
OF  THIS  ARTICLE  TO CONFIRM AN AWARD BASED ON A CONSUMER CREDIT TRANS-
ACTION, 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 ARBI-
TRATION, OF THE CLAIMS RULED UPON BY THE ARBITRATOR, AND OF  THE  CALCU-
LATION  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,  except  that  section
three  of  this  act  shall take effect on the one hundred eightieth day
after this act shall have become a law.

S1277A (ACTIVE) - Details

Current Committee:: Senate Judiciary
Law Section:: Civil Practice Law and Rules
Laws Affected:: Amd §§213, 3012 & 3215, RR3016 & 3211, add §§214-f, 306-d & 7515, CPLR
Versions Introduced in Other Legislative Sessions:: 2009-2010: S4398
2011-2012: S677
2013-2014: S67
2017-2018: S578

S1277A (ACTIVE) - Summary

S1277A (ACTIVE) - Sponsor Memo

 BILL NUMBER:  S1277A

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

 PURPOSE OF THE 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 plaintiffs 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.

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.

 LEGISLATIVE HISTORY :

2013-2014 - S.67
2011-12: S.677-A
2009: S.4398-A Referred to Codes

 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.

S1277A (ACTIVE) - Bill Text download pdf

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

                                 1277--A

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                             January 9, 2015
                               ___________

Introduced  by  Sen. PERALTA -- read twice and ordered printed, and when
  printed to be committed to the Committee on Judiciary  --  recommitted
  to the Committee on Judiciary in accordance with Senate Rule 6, sec. 8
  --  committee  discharged,  bill amended, ordered reprinted as amended
  and recommitted to said committee

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] TWO of the uniform
commercial code or article [36-B] THIRTY-SIX-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 TWO OF THE UNIFORM COMMER-
CIAL CODE OR ARTICLE THIRTY-SIX-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.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD00386-02-6

S. 1277--A                          2

  FOR  PURPOSES  OF  THIS SECTION, "THE RIGHT TO COLLECT CONSUMER CREDIT
DEBT" SHALL MEAN ANY ATTEMPTS BY THE CREDITOR, THIRD PARTY PURCHASER, OR
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-d to read as follows:
  S 306-D. 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:

S. 1277--A                          3

  (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 (j) to read as follows:
  (J) 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 THREE THOUSAND FIFTEEN 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.

S. 1277--A                          4

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. 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) AFFIDAVIT.  A REQUEST FOR A DEFAULT JUDGMENT ENTERED BY THE CLERK,
MUST  BE  ACCOMPANIED  BY AN AFFIDAVIT BY THE DEBT COLLECTOR (WHO MAY BE
THE PLAINTIFF 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 SEVEN THOUSAND FIVE HUNDRED TEN
OF THIS ARTICLE TO CONFIRM AN AWARD BASED ON A  CONSUMER  CREDIT  TRANS-
ACTION,  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  ARBI-
TRATION,  OF  THE CLAIMS RULED UPON BY THE ARBITRATOR, AND OF THE CALCU-
LATION OF FIGURES USED BY THE ARBITRATOR IN ARRIVING AT THE AWARD,  THEN
THE  PETITION  SHALL CONTAIN SUCH A STATEMENT. THE COURT SHALL NOT GRANT

S. 1277--A                          5

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, 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 S1277A

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senate Bill S1277A

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Jose Peralta

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