The New York Department of Financial Services is proposing new rules for debt collectors.These rules include:
1. Have in hand basic information before they may contact people about a debt;
2. Provide documentation when a person disputes or requests verification of the debt;
3. Inform people if alleged debts are beyond the statute of limitations; and
4. Disclose to people that their income might be exempt from collection.
The first two are becoming more common. California has a bill that would make this happen as well. Or, at least, they have a bill that would require it, whether debt collectors follow through is an entirely different story. But 3 and 4 are interesting.
Imagine a debt collector buys a debt that is 6 months past the statute of limitations. They call you and tell you this. You send them a letter that tells them to cease communication. That would be the end of their efforts because they cannot sue you on a debt that is past the statute of limitations. You would never hear from them again simply because you have been armed with knowledge – the knowledge that they are trying to collect an uncollectable debt.
Or, imagine you are a senior citizen and your only income is social security. In most cases, social security is exempt from judgment enforcement. So the debt collector tells you this, you send a cease communication letter, and then you know that, even if they sue you, you probably don’t have to worry about judgment enforcement.
These rules are going to change the landscape for consumers. It is going to be much easier to learn your rights and how to protect yourself – in New York. Now we need these rules to become part of the Fair Debt Collection Practices Act for nationwide proteect, and the Rosenthal Act in California.