New York debt collection regulations proposed
Aug 01, 2013 Phil Burgess
Debt collection agencies in New York state may be forced to navigate a more regulated landscape if recently proposed regulations are approved by state officials.
According to Newsday, recommendations from the New York Department of Financial Services (DFS) regarding potential amendments to the state's debt collection laws may introduce a host of new measures that could complicate collection practices.
Under consideration are possible policies that would require all collection firms to verify disputed accounts and notify consumers if the statute of limitations has expired on a particular debt. Also, the pending laws would force account professionals to confirm that a debt has been settled in writing.
Newsday also reported that the DFS wants to give consumers the option to choose email communication as their preferred medium for contact, which could reduce the number of debt calls that agencies can make. Also, collection companies would have to keep more detailed records of the interactions with debtors.
Currently, there are federal laws in place that regulate the industry across the nation, most notably the Fair Debt Collection Practices Act (FDCPA), which prohibits threatening debt owners and harassing calling patterns, among other things. More legislation could make this already complex task even more difficult.
"These reforms will help level the playing field for consumers so they have a fighting chance as they work hard to put their financial life back in order," said DFS Superintendent Benjamin Lawsky in a press release.
One of the primary aims of the new rules proposed by Lawsky's office is to curb erroneous practices associated with "zombie debts," or debts that have passed the statute of limitations.
In the press release, DFS officials indicated that if they contact consumers regarding such a debt, they must notify them that the statute of limitations has indeed expired every time they talk to a debtor. When this happens, consumers can use the expiration of the debt as legal protection against a lawsuit.
Collection efforts by businesses that fail to realize the limitations of filing lawsuits on zombie debts can often be costly. Such enterprises can run up a significant amount of legal expenses when there is little to no chance of collecting on an account.
This is just one of the reasons why businesses should consider using the services of a professional, third-party debt services company. These firms are knowledgeable of local, state and federal regulations regarding debt collection.