Articles Posted in Collections

If you default on credit card debt typically your credit line will be cancelled if the default is not promptly cured. Usually your account will be turned over to the internal collection department of the creditor. They will call you (frequently — often daily if not more) and send you letters about the past due debt. They may offer you a discount for a single lump sum payment or payment of an agreed reduced amount in 2-3 payments (perhaps longer).

The next stage is that the debt will get turned over to an outside debt collection agency. This is a company that specializes in collecting past due debts. They usually have a stable of collectors who are employed on a primarily contingency basis — meaning the collector’s salary is directly tied to his or her ability to collect money from you.. Many collection agencies — particularly in New York employ what has become to be know as the “Buffalo” style of collections (named after the collections agencies in that city that often utilize this style). The Buffalo style of collections is very aggressive and confrontational. Even if an individual collector does not engage in blatant violations of the Fair Debt Collections Practice Act (FDCPA) by engaging in prohibited debt collection activities — they often will create an artificial atmosphere of fear, uncertainty and urgency. For example, it would be a clear violation of FDCPA for a debtor collector to state “If you don’t pay this debt you will go to jail” — since that statement is false (we have not had debtors prison in the U.S. since the 1800s). However, a Buffalo style collector may intimate unspecified dire consequences intended to elicit fear and anxiety in the debtor, such as “I wouldn’t want to be in your shoes if you don’t pay this debt by the end of the month.” When the debtor inquires what will happen the collector might respond vaguely, such as “It’s not good” or “You’ll fine out if you don’t pay.”
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Many of our clients and prospective clients have a very limited knowledge concerning their rights when they owe a judgment. Collectors and collection agencies manipulate people’s fear — they use intimidation and the knowledge that most people in New York do not record their telephone calls to intimidate people with blatant lies, or if not blatant lies then insinuating vague and unspecified negative consequences (such as “I would not want the NYC Marshal coming to my apartment if I owed a judgment.”).

The New York City Marshals’ Handbook of Regulations (available online at http://www.nyc.gov/html/doi/html/marshals/mar1.html) provides an extensive explanation of what a NYC Marshal may and may not do to enforce a writ of execution with respect to a judgment.
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As a law firm involved in commercial debt collection and debtor-creditor matters in the New York metropolitan area (Manhattan, Brooklyn, Queens, etc.) and New Jersey, this is an issue that we face a lot. The answer, like many things involving the law, is that is depends on the facts involved. It is easier to answer to the question by describing what is not allowed.

1. What is Usury and When is a Loan Usurious?

New York makes it illegal to charge interest exceeding eighteen percent (16%) per year on loans up to $250,000. This works out to a monthly rate of one and a half percent (1.33%) per month. If a contract provides for interest above this amount it is void and unenforceable, unless it is subject to an exception. For example, credit cards and car loans issued by national banking associations (they usually have “N.A.” after their name) are subject to an exception contained in federal law that exempts them from this restriction. (It doesn’t make sense that you are subject to this restriction and the bank are not — but the banks have better lobbyists than you do.)
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We often receive inquiries from people living in New York, Queens, Bronx, and Brooklyn that a collector or collection agency has frozen their bank account, and wondering what they should do.

Collectors and collection agencies can’t freeze bank accounts. They have only two tools in their tool belts: letters and calls. However, in New York lawyers can and do freeze bank accounts. The way they do that is to get a judgment on behalf of their creditor client and then issue a restraining notice. Large collection law firms routinely issue restraining notices electronically to all the major banks.
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Many people don’t learn that a judgment has been entered against them until a bank account gets frozen or their wages get garnished. This is typically because they ignored legal papers they received (such as a summons and complaint), or they were never actually served.

If a debtor owes money for a consumer debt (i.e., debt for personal, family or household purposes) he or she is supposed to be sued in the county where the contract was signed, or in the county where he or she lives. In Continue reading