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S00578 Summary:

Amd 213, 3012 & 3215, RR3016 & 3211, add 214-g, 306-d & 7515, CPLR
Enacts the "consumer credit fairness act"; establishes a 3 year statute of limitations for commencement of a cause of action arising out of a consumer credit transaction where the defendant is a purchaser, borrower or debtor; establishes a notice of lawsuit which must be mailed to the defendant in such a cause of action; establishes certain requirements for the complaint in such an action; provides for arbitration of such actions; requires debt collectors to send consumers a written notice of their rights under state law along with their initial debt collection correspondence; such notice would contain information such as who and when a principal creditor may contact a debtor about the debt owed as well as the fact that a principal creditor cannot disclose information affecting a consumer debtor's reputation for creditworthiness if the principal creditor knows or has reason to know such information is false; applies to consumer rather than commercial debts.
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S00578 Actions:

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S00578 Memo:

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S00578 Text:

                STATE OF NEW YORK
                               2017-2018 Regular Sessions
                    IN SENATE
                                     January 4, 2017
        Introduced  by  Sen. PERALTA -- read twice and ordered printed, and when
          printed to be committed to the Committee on Judiciary
        AN ACT to amend the civil practice law and rules, in relation to consum-
          er credit transactions

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
     1    Section  1.  Short  title. This act shall be known and may be cited as
     2  the "consumer credit fairness act".
     3    § 2. Subdivision 2 of section 213 of the civil practice law and rules,
     4  as amended by chapter 709 of the laws of 1988, is  amended  to  read  as
     5  follows:
     6    2.  an  action  upon a contractual obligation or liability, express or
     7  implied, except as provided in section two  hundred  thirteen-a  or  two
     8  hundred  fourteen-g  of  this  article or article [2] two of the uniform
     9  commercial code or article [36-B] thirty-six-B of the  general  business
    10  law;
    11    §  3.  The  civil  practice  law  and rules is amended by adding a new
    12  section 214-g to read as follows:
    13    § 214-g. Certain actions arising out of consumer  credit  transactions
    14  to  be commenced within three years. An action arising out of a consumer
    15  credit transaction where a purchaser, borrower or debtor is a  defendant
    16  must  be commenced within three years, except as provided in section two
    17  hundred thirteen-a of this article or article two of the uniform commer-
    18  cial code or article thirty-six-B of the general business law. When  the
    19  period  within  which  an action may be commenced under this section has
    20  expired, the right to collect consumer credit debt  is  extinguished  as
    21  well as the remedy.
    22    For  purposes  of  this section, "the right to collect consumer credit
    23  debt" shall mean any attempts by the creditor, third party purchaser, or
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        S. 578                              2
     1  other authorized third party to collect such  debt  including,  but  not
     2  limited to, calls, mail or other attempts to collect.
     3    §  4.  The  civil  practice  law  and rules is amended by adding a new
     4  section 306-d to read as follows:
     5    § 306-d. Additional mailing of notice in an action arising  out  of  a
     6  consumer  credit transaction. 1. At the time of filing with the clerk of
     7  the proof of service of the summons and complaint in an  action  arising
     8  out  of a consumer credit transaction, the plaintiff shall submit to the
     9  clerk a stamped envelope addressed to  the  defendant  together  with  a
    10  written  notice  in  clear type of no less than twelve-point in size, in
    11  both English and Spanish, and containing the following language:
    12                              NOTICE OF LAWSUIT
    13  (DATE)
    14  (NAME OF COURT)
    15  (COUNTY)
    20  Plaintiff:__________________________________
    21  Defendant:__________________________________
    22  Name of original creditor, unless same:______________________________
    23  Index number:_______________________________
    24  Attention: a lawsuit has been filed against you claiming  that  you  owe
    25  money for an unpaid credit card, medical, student loan or other debt.
    26  You  should  go to the court clerk's office at the above address as soon
    27  as possible to respond to the lawsuit. You may wish to contact an attor-
    28  ney. If you do not have an attorney, help is available at the court.
    29  If you do not respond to the lawsuit, the court  may  enter  a  judgment
    30  against  you.  Once  entered, a judgment is good and can be used against
    31  you for twenty years, and  your  money,  including  a  portion  of  your
    32  paycheck  and/or  bank account, may be taken. Also, a judgment will hurt
    33  your credit score and can affect your ability to rent  a  home,  find  a
    34  job, or take out a loan.
    35  You CANNOT be arrested or sent to jail for owing a debt.
    36  It is important that you go to the court clerk's office listed above and
    37  bring  this notice with you.  Additional information can be found at the
    38  court system website at:  www.courts.state.ny.us
    39    2. The face of the envelope shall be addressed to the defendant at the
    40  address at which process was served, and shall contain  the  defendant's
    41  name, address (including apartment number) and zip code. The face of the
    42  envelope  also  shall state the appropriate clerk's office as its return
    43  address.
    44    3. The clerk  promptly  shall  mail  to  the  defendant  the  envelope
    45  containing  the  additional  notice set forth in subdivision one of this
    46  section. No default judgment based on the defendant's failure to  answer
    47  shall be entered unless there has been compliance with this section, and
    48  at least twenty days have elapsed from the date of mailing by the clerk.
    49    §  5.  Subdivision  (a)  of section 3012 of the civil practice law and
    50  rules is amended to read as follows:
    51    (a) Service of  pleadings.  The  complaint  may  be  served  with  the
    52  summons, except that in an action arising out of a consumer credit tran-

        S. 578                              3
     1  saction,  the  complaint  shall be served with the summons. A subsequent
     2  pleading asserting new or additional claims for relief shall  be  served
     3  upon  a party who has not appeared in the manner provided for service of
     4  a  summons.  In any other case, a pleading shall be served in the manner
     5  provided for service of papers generally. Service of an answer or  reply
     6  shall  be made within twenty days after service of the pleading to which
     7  it responds.
     8    § 6.  Rule 3016 of the civil practice law  and  rules  is  amended  by
     9  adding a new subdivision (j) to read as follows:
    10    (j)  Consumer  credit  transactions.  In  an  action  arising out of a
    11  consumer credit transaction where a purchaser, borrower or debtor  is  a
    12  defendant,  the contract or other written instrument on which the action
    13  is based shall be attached to the complaint and the  following  informa-
    14  tion shall be set forth in the complaint:
    15    1. The name of the original creditor;
    16    2. The last four digits of the original account number;
    17    3. The date and amount of the last payment;
    18    4.  If  the  complaint  contains a cause of action based on an account
    19  stated, the date that the final statement of account was mailed  to  the
    20  defendant;
    21    5. An itemization of the amount sought, by (i) principal; (ii) finance
    22  charge  or  charges;  (iii)  fees imposed by the original creditor; (iv)
    23  collection costs; (v) attorney's fees;  (vi)  interest;  and  (vii)  any
    24  other fees and charges. The term "finance charge" means a finance charge
    25  as defined in Regulation Z, 12 C.F.R. § 226.4;
    26    6. Whether the plaintiff is the original creditor. If the plaintiff is
    27  not  the  original  creditor,  the complaint shall state (i) the date on
    28  which the debt was assigned to the plaintiff; and (ii) the name of  each
    29  previous  owner  of  the  account  and  the  date  on which the debt was
    30  assigned to that owner; and
    31    7. Any matters required to be stated with  particularity  pursuant  to
    32  rule three thousand fifteen of this article.
    33    § 7. Subdivision (e) of rule 3211 of the civil practice law and rules,
    34  as  amended  by  chapter  616 of the laws of 2005, is amended to read as
    35  follows:
    36    (e) Number, time and waiver of objections; motion to  plead  over.  At
    37  any  time before service of the responsive pleading is required, a party
    38  may move on one or more of the grounds set forth in subdivision  (a)  of
    39  this  section,  and no more than one such motion shall be permitted. Any
    40  objection or defense based upon a ground set forth  in  paragraphs  one,
    41  three,  four,  five and six of subdivision (a) of this section is waived
    42  unless raised either by such motion or in  the  responsive  pleading.  A
    43  motion  based  upon a ground specified in paragraph two, seven or ten of
    44  subdivision (a) of this section may be made at any subsequent time or in
    45  a later pleading, if one is permitted;  in  any  action  other  than  an
    46  action  arising  out of a consumer credit transaction where a purchaser,
    47  borrower or debtor is a defendant, an objection  that  the  summons  and
    48  complaint,  summons  with notice, or notice of petition and petition was
    49  not properly served is waived if, having raised such an objection  in  a
    50  pleading,  the objecting party does not move for judgment on that ground
    51  within sixty days after serving the pleading, unless the  court  extends
    52  the time upon the ground of undue hardship. The foregoing sentence shall
    53  not  apply  in  any  proceeding  under subdivision one or two of section
    54  seven hundred eleven of the real property actions and  proceedings  law.
    55  The  papers  in  opposition  to a motion based on improper service shall
    56  contain a copy of the proof of service, whether or not previously filed.

        S. 578                              4
     1  An objection based upon a ground specified in paragraph eight or nine of
     2  subdivision (a) of this section is waived if a party moves on any of the
     3  grounds set forth in subdivision (a) of  this  section  without  raising
     4  such  objection or if, having made no objection under subdivision (a) of
     5  this section, he or she does not raise such objection in the  responsive
     6  pleading.
     7    §  8.  Subdivision  (f)  of section 3215 of the civil practice law and
     8  rules, as amended by chapter 453 of the laws of 2006, is amended  and  a
     9  new subdivision (j) is added to read as follows:
    10    (f)  Proof.  On any application for judgment by default, the applicant
    11  shall file proof of service of the  summons  and  the  complaint,  or  a
    12  summons  and  notice  served  pursuant to subdivision (b) of rule 305 or
    13  subdivision (a) of rule 316 of this chapter,  and  proof  of  the  facts
    14  constituting the claim, the default and the amount due by affidavit made
    15  by  the party, or where the state of New York is the plaintiff, by affi-
    16  davit made by an attorney from the office of the  attorney  general  who
    17  has  or  obtains knowledge of such facts through review of state records
    18  or otherwise. Where a verified complaint has been served, it may be used
    19  as the affidavit of the facts constituting the claim and the amount due;
    20  in such case, an affidavit as to the default shall be made by the  party
    21  or  the  party's attorney. In an action arising out of a consumer credit
    22  transaction, if the plaintiff is not the original creditor,  the  appli-
    23  cant  shall  include:  (i)  an affidavit by the original creditor of the
    24  facts constituting the debt, the default in payment, the sale or assign-
    25  ment of the debt, and the amount due at the time of sale or  assignment;
    26  (ii) for each subsequent assignment or sale of the debt to another enti-
    27  ty,  an  affidavit  of sale of the debt by the debt seller, completed by
    28  the seller or assignor; and (iii) an  affidavit  of  a  witness  of  the
    29  plaintiff, which includes a chain of title of the debt, completed by the
    30  plaintiff  or  plaintiff's  witness.  When  jurisdiction  is based on an
    31  attachment of property, the  affidavit  must  state  that  an  order  of
    32  attachment  granted in the action has been levied on the property of the
    33  defendant, describe the property and state its value. Proof  of  mailing
    34  the  notice  required by subdivision (g) of this section, where applica-
    35  ble, shall also be filed.
    36    (j) Affidavit.  A request for a default judgment entered by the clerk,
    37  must be accompanied by an affidavit by the debt collector  (who  may  be
    38  the  plaintiff  or  plaintiff's  attorney) stating that after reasonable
    39  inquiry, he or she has reason to believe that the statute of limitations
    40  has not expired.
    41    § 9. The civil practice law and rules  is  amended  by  adding  a  new
    42  section 7515 to read as follows:
    43    §  7515.  Confirmation  of  an award based on a consumer credit trans-
    44  action. In any proceeding under section seven thousand five hundred  ten
    45  of  this  article  to confirm an award based on a consumer credit trans-
    46  action, the party seeking to confirm the award shall  plead  the  actual
    47  terms  and  conditions  of  the  agreement to arbitrate. The party shall
    48  attach to its petition (1) the agreement to arbitrate;  (2)  the  demand
    49  for  arbitration  or  notice  of  intention  to arbitrate, with proof of
    50  service; and (3) the arbitration award, with proof of  service.  If  the
    51  award  does  not  contain  a statement of the claims submitted for arbi-
    52  tration, of the claims ruled upon by the arbitrator, and of  the  calcu-
    53  lation  of figures used by the arbitrator in arriving at the award, then
    54  the petition shall contain such a statement. The court shall  not  grant
    55  confirmation  of  an award based on a consumer credit transaction unless
    56  the party seeking to confirm the award has complied with this section.

        S. 578                              5

     1    § 10. This act shall take effect on the first of January next succeed-
     2  ing the date on which it shall have become a law,  except  that  section
     3  three  of  this  act  shall take effect on the one hundred eightieth day
     4  after this act shall have become a law.
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