The New York Fair Consumer Judgment Interest Act lowers the judgment rates in actions involving consumer debt, including unpaid debts, from 9% to 2%. ACA International and the New York State Collectors Association will continue to advocate for an amendment on the application to unpaid debts until the law takes effect in April.
4 minute read
New York will lower its interest rate on money judgments in actions involving consumer debt for the first time since 1981 after Gov. Kathy Hochul signed the Fair Consumer Judgment Interest Act (FCJIA) on Dec. 31, 2021.
The goal of the law is to remedy hardships on consumers caused by the statutory judgment interest rate, which have increased during the COVID-19 pandemic.
The new law is one of three from New York’s legislative session that impacts the accounts receivable management (ARM) industry.
With the governor’s signature on the FCJIA, Section 5004 of the civil practice law and rules is amended to read as follows:
“[The] interest shall be at the rate of [9%] per annum, except where otherwise provided by statute; provided the annual rate of interest to be paid in an action arising out of a consumer debt where a natural person is a defendant shall be [2%] per annum on a judgment or accrued claim for judgments entered on or after the effective date of the chapter of the laws of , which amended this section, and for interest upon a judgment pursuant to [S]ection  of this article from the date of the entry of judgment on any part of a judgment entered before the effective date of the chapter of the laws , which amended this section that is unpaid as of such effective date.”
Consumer debt is defined in the law as “any obligation or alleged obligation of any natural person to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family or household purposes, whether or not such obligation has been reduced to judgment, including, but not limited to, a consumer credit transaction, as defined in [S]ubdivision (f) of [S]ection  of this chapter.”
Advocacy on Retroactive Judgment Rate
ACA International and the New York State Collectors Association (NYSCA) worked with other industry coalition partners to advocate for a chapter amendments to remove the language stating the new money judgment would apply to existing, unpaid judgments before the law takes effect.
However, as signed by the governor, the law intends that the 2% money judgment rate will apply to unpaid consumer debt judgments as of the law’s effective date; and shall apply retroactively to consumer debt judgments entered prior to the effective date that are not yet fully paid and satisfied as of the effective date.
The law will take effect 120 days from the governor’s signature, or April 30, 2022.
Until the effective date, there is still an opportunity for ACA and the NYSCA to advocate for the chapter amendments by Hochul.
Busy Legislative Session in New York
New York’s legislative session was one of the busiest tracked by ACA and the NYSCA.
In 2021, legislation was introduced in New York that would have implemented a statewide licensing program along with some onerous documentation and collection procedures. ACA and the NYSCA worked closely with a large coalition of ARM industry lobbyists to advocate for amendments. The legislation was eventually tabled and did not receive a vote before the legislature adjourned in June.
Gov. Hochul also signed a bill to reduce the statute of limitations in New York to three years as well as a bill to require debt collectors to inform consumers in each initial communication that written communications are available in large print format, ACA previously reported.
From January-June 2021, ACA and its state units identified and tracked more than 860 state-level bills on topics such as medical debt, garnishment and data privacy that would impact the ARM industry if enacted, ACA previously reported.
New York’s session will resume this month.
Stay Connected through the ACA Huddle
ACA recommends members join the weekly ACA Huddle webinar at 11 a.m. CDT Wednesdays for state legislative and regulatory updates. The ACA Huddle features advocacy, compliance and education updates as well as guest speakers, and one-time registration is available through the ACA events calendar.
On Jan. 5, 2022, ACA’s federal advocacy team will recap the busy year-end activity from Congress in 2021. They will also talk about potential challenges and opportunities for the ARM industry in Congress and at regulatory agencies in 2022, including predictions for activities in Congress, the CFPB and the FCC. Speakers will include Leah Dempsey, vice president and senior counsel of federal advocacy, Mark Brennan, partner at Hogan Lovells, Patrick Russell, ACA’s federal advocacy director, and Travis Johnson, managing principal at 1607 Strategies.
Visit the ACA Huddle webpage to complete a one-time registration for the ACA Huddle and access recordings of the ACA Huddle presentations.
Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to email@example.com. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse. Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar for a listing of upcoming CORE Courses and Hot Topics featuring critical educational opportunities for your company.