NYLAG Applauds Consumer Credit Reforms Proposed by NY State Chief Judge Lippman
The New York Legal Assistance Group (NYLAG) overwhelmingly supports the proposed consumer credit reforms announced by Chief Judge Jonathan Lippman earlier this week, and shares his vision that New York “set the national standard by which consumer debtors receive fair treatment in the courts.” The Chief Judge made the new reforms the centerpiece of a speech he gave at the Court of Appeals commemorating Law Day, a national day to recognize the importance of law in society.
“Judge Lippman’s reforms will take substantial steps toward ensuring that New York consumers, the vast majority of whom are unrepresented, are protected from routine abuses by debt buyers and other creditors,” said NYLAG President, Yisroel Schulman. “For too long, these entities have made a lucrative business of exploiting New York’s court system to the detriment of vulnerable, low-income New Yorkers.”
Judge Lippman’s sweeping proposal targets the unjust tactics used in credit collection lawsuits brought against consumers – most of them poor or low-income individuals, including many who are elderly, disabled, or low-English proficient. The lawsuits are typically initiated by third-party debt buyers, who purchase delinquent credit card debt from banks or credit card companies for pennies on the dollar and then commence lawsuits in huge numbers on the basis of boilerplate language and inaccurate information, often against the wrong individual or for the wrong amount. According to Judge Lippman’s office, more than 100,000 such cases are filed every year in New York State.
NYLAG has long worked to protect consumers from the same unlawful practices that Judge Lippman’s proposal aims to eliminate. NYLAG runs the Volunteer Lawyer for a Day-Consumer Credit Project in the Bronx and Queens Civil Courts, a project Judge Lippman recognized in his remarks as a critical resource for victims of debt buyers. And NYLAG’s Special Litigation Unit has commenced class action lawsuits against some of the most ruthless debt buyers and their attorneys, seeking redress for the victims of precisely the same unlawful practices Judge Lippman now seeks to eradicate: obtaining default judgments on the basis of falsified and legally insufficient affidavits, many against defendants who were never served.
The reforms are being issued for a 30-day public comment period, to expire on May 30, with implementation expected by mid-June 2014. Among the proposed measures are:
- Requirements that creditors adhere to the substantive and evidentiary standards for default judgments required under New York State law, including by providing original proof that a debt is owed, that the amount being sought is correct, and that the party bringing the suit has the right to do so.
- Rules and policies to stop the practice of suing on debt when the statute of limitations has expired as well as to prevent the notorious “sewer service” ubiquitous in consumer debt cases.
- Procedures ensuring that unrepresented consumers who appear in court have access to comprehensible information and resources to raise appropriate defenses.
- Partnerships with bar associations and law schools to increase pro bono representation.
View Judge Lippman’s Law Day remarks here.