New York Court administrators recently announced new rules impacting cases involving debt collector-plaintiffs with certain debt claims against consumers. As we discussed on May 7th when the proposed rules were announced, the new rules place a higher burden of proof on debt collector-plaintiffs to establish chain of title and that they actually own the debt at issue. If these new requirements cannot be met due to the absence of necessary information, a default judgment will not be entered in the New York state courts.
As stated above, the new rules only impact claims related to certain types of debt, not all debts (e.g., student loans or car loans). While the new rules and filing requirements will become effective on October 1, they initially will impact only original creditor actions and actions in which the debt was bought from an original creditor. On July 1, 2015, this rule will expand to all cases involving debt collectors, regardless of when the debt was acquired. In other words, debt collector-plaintiffs can be twice removed from the original creditor. For purposes of clarity, an “original creditor” is defined as “the financial institution that owned the consumer credit account at the time the account was charged off, even if that financial institution did not originate the account.”
The new rules require that the following documents be provided (note that this list may change depending on the facts and circumstances surrounding a specific case):
- Debt collector affidavit: Identifying the date that the debt was purchased and information showing chain of title for the debt, including exhibit(s) showing assignment and/or certain business records
- Original creditor affidavit: Identifying the date that the debt was sold to the debt collector-plaintiff, including exhibit(s) such as the bill of sale, assignment, and certain business records
- Debt seller affidavit (effective July 1, 2015): Like the original creditor affidavit, identifying the dates that the debt was sold, including exhibit(s) such as the bill of sale and/or assignment (note that this will need to be provided for each debt seller who owned the debt prior to the debt collector-plaintiff)
- Attorney affirmation: Attesting that the statute of limitations has not expired
Further, for purposes of ensuring that service is properly completed, debt collector-plaintiffs must provide the court with an additional notice of the lawsuit. This notice will be mailed by the court to the consumer-defendant.