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Photo of a stack of money to represent when a client offers to settle but does not payThe Consumer Financial Protection Bureau (CFPB) has more to do with your debt collection claim than you might think. Professionally, your business may deal with consumers directly or indirectly. Personally, CFPB has a lot to do with how companies approach you to collect debt and other financial products. You may be an accountant brought in to do work for several related companies and asked to handle the officer’s personal tax work. The portion of the debt related to the collection of the receivable for the individual tax work would be covered.

Or, perhaps you are a contractor working in a commercial space, and then, while working in the building, the apartment owners ask you to handle some renovations in individual apartments. If the individual owner or tenant owes the receivable and you seek payment from the individual through a debt collector, the CFPB will have a watchful eye.

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In order to go to trial in a debt collection case, a few things have to happen. Firstly, all parties must have joined in the case, meaning the defendants, after being served with a complaint, have had time to file an answer and request discovery, if any.

For those parties that are simply looking to stall, they may file an answer with a general denial for the purpose of delay.

Most often, discovery is straightforward, whereby the parties exchange information and documentation that may include: correspondence, statements, invoices, and any other documents relevant to the case. For example, if a company is looking to recover an amount due based on goods sold and delivered, the documents produced in discovery would most likely include purchase orders, invoices, proofs of delivery, demands for payments, and statements.

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There are a number of new developments in New York State legislation that will change New York debt collection law and likely impact your receivables and collection claims, and ultimately your bottom line.

In November, New York Governor Kathy Hochul signed the Consumer Fairness Act, which takes effect on May 22, 2022, six months after the bill was signed into law. The new law has a direct impact on the collection of consumer claims within New York State and covers in-house collections efforts as well as those placed with a third-party debt collector including a collection attorney or agency.

There is one change that is most significant and, if you are working with consumers, will directly affect you. Most significantly, the Act reduces the statute of limitations — the period of time in which you have to file suit against a consumer debtor — from six years to three years.

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percentage sign to represent Legal Interest on Consumer ClaimsThe legal rate of interest that can be awarded in a money judgment against an individual person is expected to be reduced as New York continues to protect the rights of individuals. The laws of usuary, which specifies the legal rate of interest that can be charged to a consumer is not at issue at this time. What is awaiting the Governor’s signature is the percentage rate of interest that can be included in a money judgment entered against an individual.

Until now, New York never differentiated between individuals and business entities (i.e. corporations, LLCs, LLPs, etc.) when it came to the legal interest that could be imputed or calculated and included in a money judgment. But, as New York continues to issue legislation aimed to increase consumer fairness, it’s starting to distinguish between consumers and corporations. The current legal rate of 9% interest charged to corporate entities will remain unchanged.

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gavel to represent monetary limit in the civil courtsEffective January 1, 2022, the jurisdictional limit of the New York civil courts will increase from $25,000 to $50,000. On its face, the availability of a lower-cost court to adjudicate claims which fall within the $25,000 to $50,000 sounds appealing. The cost outlay is significantly lower in the civil court compared to the supreme court. For example, the initial fee for an index number in the supreme court is $210 whereas it is $45 for commercial claims and $140 for consumer credit transactions in civil court. In order for a case to be assigned to a judge in the supreme court the fee is $95 whereas, in the civil court, there is no fee. But aside from the difference in cost advance, is the increase of the monetary limit in the civil courts good for creditors bringing debt collection claims in the New York state courts?

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Photo of a statue of woman holding scales to represent a good collection attorney.There is no state as liberal as New York when it comes to commercial debt collection and the enforcement of judgments against commercial entities. New York Civil Practice and Rules Article 52 grants the judgment creditor many liberties and privileges when it comes to enforcing a judgment. To ensure the best possible outcome, you’ll want to make sure you have a good collection attorney who knows how to maneuver through New York’s liberal enforcement policies.

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Zoomed in image of a $100 bill to represent Funds Exempt From Judgment EnforcementWhen considering what funds are exempt from judgment enforcement and the reach of judgment creditors, New York and the federal government draw a line between enforcing judgments against consumers and enforcing judgments against commercial entities.

COVID-19 stimulus payments were the latest addition to the list of assets exempt from execution by judgment creditors in New York. Benefits payable to companies were not exempt and, as of October 2021, may still be restrained by a judgment creditor enforcing a judgment in New York against a commercial debtor.

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person using a credit card to represent credit card processor loanCredit card processors often offer loans to businesses that accept credit cards. While these loans may have seemingly inviting agreements, there are some terms that offer the credit card processor speedier debt collection relief against you.

Here are a few things you may want to consider before agreeing to the terms of the loan.

Default

With most loans, failure to pay as required by the underlying agreement or failure to maintain a minimum balance constitutes a default in the loan agreement. Loans from a credit card processor work differently. There are many ways to default under the terms of the lending agreement:

  • A predetermined percentage drop in total sales
  • A predetermined percentage drop in settlement amount
  • Failure to process any charges through the processor during a fixed number of days
  • Use of another credit card processor
  • Worries from the credit card processor and/or their lender that they won’t be repaid

The laundry list of situations that constitute a default makes it far easier for a buyer to “default,” which enables the lender to accelerate payment, penalties, and the like.

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Jocelyn Nager, Super LawyerMs. Jocelyn Nager, managing partner of the New York debt collection law firm Frank, Frank, Goldstein & Nager P.C., has been named a “Super Lawyer” for the sixth consecutive year.

Super Lawyers rates outstanding lawyers from more than 70 practice areas, recognizing no more than 5 percent of attorneys in each state. Lawyers featured have attained a high degree of peer recognition and professional achievement and are evaluated through rigorous independent research, peer nominations, and peer evaluations.

This honor follows Inc. Magazine recognizing FFGN on its prestigious Inc. 5000 list in August. as one of the fastest-growing private companies in the United States. FFGN landed at 3,062 on Inc.’s fastest-growing companies list, coming in ahead of thousands of other companies across America.

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image of a calculator to represent debt collection poor billingAssume you have a client who owes you $10,000. You have a signed contract from the debtor as well as a personal guarantee. The signed documentation clearly demonstrates both the corporate debtor and the guarantor are responsible for the debt. However, statements provided to the debtor and the guarantor make the amount they owe unclear. Unfortunately, your poor billing practices might complicate your debt collection endeavors.  So how can you obtain a judgment for the amount due against the debtor and the guarantor?

In the New York court system, under the circumstances above, the court may hold what is known as a “bifurcated trial.” Bifurcated trials are more prevalent in torts claims than contract claims, but they can occur in contract actions. In this type of trial, the court first holds a trial to determine the defendant’s liability. After liability has been ruled upon by the judge or jury, the court will hold a second trial to decide the amount of money the defendant owes the plaintiff. This amount is known as damages. This is different from a “unified trial” in which the court rules on both liability and damages in the same trial proceeding.

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