Can Payday Lenders and Other Creditors Legally Harass New Yorkers?
How often do debt collectors harass New Yorkers?
One common reason why clients come into my office is that debt collectors are harassing them. Quite often the harassment is illegal. My clients have creditors calling them late at night, calling their family members and even their employers. All of these actions are illegal for third-party debt collectors. In fact, The Fair Debt Collection Practices Act (FDCPA) is a federal law that regulates behavior by third-party debt collectors. The FDCPA does not regulate original creditors who the debt was initially owed to.
In 2009 the New York City Consumer Protection Law expanded the licensing and regulatory authority of the Department of Consumer Affairs (DCA) to include businesses that buy debt. All debt collection agencies in New York must have a license number given by the DCA. Practically speaking, there is a checklist of things you should do when a debt collection agency contacts you by phone:
- Make sure to ask for the name of the debt collection agency, name of the original creditor, their phone number, address and the amount of debt owed.
- Ask for the DCA license number. In New York this can be verified on the DCA’s website at: nyc.gov/consumers.
- Send a certified letter requesting validation and verification of the debt.
- Check the Statute of Limitations for the debt. In New York the Statute of Limitations to pursue legal action for credit cards (open-ended accounts) is 6 years.
Sometimes the best thing to do is to record the harassing phone calls. If you do this you should state that the call is being recorded and that you will take any continued communication on their part as their consent to be recorded. You would be surprised how often the debt collector will start cursing on the phone. In fact, the use of profanity on the phone is a violation of the FDCPA. If done properly this evidence can be used in court to sue the violating debt collector.
Payday loans are illegal in New York
Some of the worst offenders of the law are payday loan companies. They often claim that because they operate out of New York they are not violating New York laws. In fact they are. The laws regulating payday loans in New York are very strict (N.Y. Banking Law 340 et seq., N.Y. Banking Law 373. Criminal Law – N.Y. Penal Code 190.40). Quite often payday companies will even harass family members and the employers of people who have taken out the loan. These lenders will threaten immediate civil and legal action on the debtors unless they are given bank account and routing numbers on the phone immediately. The truth is that these companies will not even give out there addresses on the phone. Just try and ask them where to send a check and they will change the subject. They know that if they give an address out they may be sued by an attorney like myself for violating the law. Anyone who lives in New York State and is a victim to a payday lender should contact the New York State Banking Department and the DCA.
Is Bankruptcy an Option?
This option will end all forms of harassment immediately. The second a bankruptcy petition is filed an automatic stay is imposed. This stay means that anyone in the world that you owe money to is forbidden by federal law from communicating with you about any debt. If you hire an attorney to represent you creditors may still contact your attorney. In most cases this stay lasts for the entire case and ends when the debts are officially discharged.
If you are interested in exploring your options through bankruptcy contact my office at 212-244-2882 for a free consultation.