When you’re in over your head financially, the creditors you have to worry about the most are those with the power to sue you. After all, a lawsuit is the first step to garnishing your bank account. 

Fortunately, New York has several regulations governing who may and may not launch a debt collection lawsuit in New York.

The Consumer Credit Fairness Act of 2021 sets a three-year statute of limitations on debt-collection lawsuits. This cuts down on predatory companies that buy ancient debts and try to collect them with lawsuit threats.  Companies may not use the threat of a time-barred lawsuit to try to intimidate consumers into paying debts. In addition, any payment that a consumer makes after that three-year period may not be used to revive the debt. As payday loans are illegal in New York, a collection agency may not try to collect on a payday loan. 

The act creates other protections as well. For example, debt collectors may not call you more than seven times in any seven days and must wait seven days before calling again after contacting a consumer over the phone. They may not contact consumers via work emails, public social media postings, or third parties. If a consumer asks a debt collector to stop using any method of communication other than US mail, the debt collector must leave them alone. 

It is also now illegal for debt collection agencies in New York to use “caller ID spoofing.” 

If a debt collector breaks the law, you may issue a complaint by visiting nyc.gov/dca. 

If you do get sued, there are defenses you may use:

• You do not owe the money
• You dispute the amount of the debt
• Plaintiff has been unjustly enriched
• Plaintiff is violating the duty of good faith and fair dealing
• Contract is unfair
• Collateral was not sold at a commercially reasonable price
• You have no business relationship with the plaintiff
• You were only an authorized user
• You already settled the debt or paid the debt

If someone is trying to sue you for a debt that is legal in New York, and none of these defenses apply, you can still stop the lawsuit by filing for bankruptcy. Usually, by the time a debt lawsuit is in the works, it is better to file for bankruptcy than it is to wait for the lawsuit, and the subsequent garnishment, to play out.

Are you deeply in debt? Call our office to schedule a case review today if you’re in trouble. We’ll be happy to help you get a fresh start. 

See also: 

How to Avoid Garnishment in New York 

When May a Creditor Request a Lift of Automatic Stay in New York? 

Can I Recover Garnished Wages in a New York Bankruptcy?