New Requirements Seek To Confine Debt Collections

Debt collectors could be dealing with stricter regulations on their ability to collect money if bills proposed by the governor and New York state Assembly ever get passed by the state Senate. Before the state Senate went into a terminal impasse, the state Assembly passed a series of laws aimed at cutting down on debt collector abuses that include threatening phone calls, harassment and intimidation. In addition, Gov. David Paterson has proposed similar measures to protect the public from abusive consumer debt collection practices.

The proposals would establish the Consumer Credit Fairness Act, which would reduce the current statute of limitations on personal debt from six to three years and would prohibit debt collectors from recovering debts that exceed the statute of limitations. It would also require debt collection firms to provide consumers with a written Debtors Bill of Rights that details the manner in which a debt collection company can recover debt and informs customers of frequent dishonest practices.

Debt collection organizations would also be required to get a license of operation from the state of New York and would require firms to hand in a summary of the methods used to confirm the certainty of debts it seeks to recover, a clear record-keeping policy and whether it intends to sell debts. Don L. Hochler, an East Meadow attorney, said the designed rules are a fair way to deal with abuses that have grown more repeated with the economic downturn.

According to the governors office, there were almost 3,900 complaints made to the state about debt collectors in the past four years. The consumer more often than not had no idea about any of the changes in debt holders and didnt know who it was that was trying to collect on the debt.

The proposals would necessitate the collectors to adjust with the requirements of the federal Fair Debt Collection Practices Act, which restricts calls to consumers to between 8 a.m. and 9 p.m. Kevin Schlosser, chairman of the litigation and dispute resolution law practice at Meyer, Suozzi, English & Klein in Garden City, said more people are paying attention to debt collection practices because of the economy.

Debt collectors first job is to communicate with consumers and answer consumer problems, Cherner said. Proposals that only restrict communication will only cause a rise in complaints.

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