Following up on New York’s new debt collection regulations from part 1 of this series, collections agencies must now provide the consumer with the identity of the original creditor and an itemized accounting detailing charge-off, interest accrued, fees and charges, and payments since charge-off. Besides its obvious utility, this requirement is especially helpful since many of these debts are very old, and many consumers cannot even recall what the original debt was for. Prior to this mandatory disclosure, the consumer might have scrambled to pay the debt without even considering if it was already paid; but now, the consumer will have all the knowledge necessary to make an informed decision about paying the alleged debt. This requirement will likely prevent certain debt buyers from collecting because if they lack this information (which is often the case), they cannot comply with regulations and lawfully resume collection. Unfortunately, because of the detail involved, however, this regulation does not go into effect until August 2015
Collectors must also now have procedures in place to determine the particular statute of limitations on the debt. Furthermore, if the debt buyer knows, or has reason to know, the timeframe to file suit may have expired, it must make certain disclosures to the consumer regarding its own knowledge of expiration and consequent restrictions (FDCPA violations), as well as the consumer’s rights if they choose to acknowledge, admit, or deny the debt.
In the situation where the consumer either orally or in writing disputes the legitimacy of the debt, the debt buyer must now inform the reticent consumer how to request substantiation of the debt. If the consume requests it, the collector has 60 days to provide substantiation, through necessary documents and statements, and it must cease all collection efforts until it provides such substantiation. The documents and statements must consist of either an actual copy of the judgment or the complete documented history of the debt. This regulation, like the disclosure of the details of the particular debt, does not become effective until August 2015.
The new regulations also provide that if the debt collector consents to a payment schedule or other agreement to settle the debt, it is now required to provide the consumer written confirmation of the agreement within five days of such agreement. While the debtor makes payments, the collector must also provide a quarterly accounting. And once the consumer pays off such debt, the collector has 20 days to provide written confirmation of repayment.
Lastly in the batch of new regulations, if the consumer agrees, the debt collector may communicate with the consumer through email instead of telephone calls.
As consumer defense attorneys we are happy to hear about these new regulations but can admit that these collectors and debt buyers will adapt and potentially abuse these new protections.