The New York Legal Assistance Group (NYLAG) is pleased to report that, after more than a year of zealous advocacy by NYLAG and partner organizations, the New York State Office of Court Administration (OCA) has issued guidance that will provide critical protections to consumers burdened by judgments for rental arrears, student loan, education, and medical debts. The newly issued guidance, available here , clarifies that the 2% post-judgment interest rate in N.Y. C.P.L.R. § 5004 applies not only to credit cards, but also to judgments for these other types of debt. New Yorkers experiencing poverty, especially New Yorkers of color, are disproportionately harmed by these judgments and by persistent errors that have prevented this law’s full implementation for years. We applaud OCA’s decision to clarify the scope of the post-judgment interest rate, providing critical protections to NYLAG’s clients and New Yorkers across the state.
In 2021, the New York legislature enacted, and Governor Kathy Hochul signed, the New York Fair Consumer Judgment Interest Act, which aimed to “protect New Yorkers from further financial hardship” following the COVID-19 pandemic by mandating that 2% post-judgment interest be entered on judgments covering consumer debts. The statutory definition of that term makes it crystal clear that “consumer debts” includes rental arrears, medical debt, and student loan debt and tuition debt.
Yet since the law went into effect, judgments were regularly and persistently being entered against tenants and consumers across New York State at a higher interest rate than allowed by law. As a result, individuals were at risk of being forced to pay thousands of dollars in unlawful interest, even while they badly needed those funds to pay for basic expenses like rent, groceries, and medical care. This was a particular problem in Housing Court, where the vast majority of judgments stemming from residential rental arrears were entered at the incorrect 9% interest rate.
NYLAG, joined by partner organizations Legal Services of the Hudson Valley, Legal Services NYC, The Legal Aid Society, and Mobilization for Justice, first wrote to OCA in February 2023 and again in June 2023. NYLAG then had a series of meetings with OCA staff over the following months, and met intensively with OCA in February and March of this year, culminating in OCA’s decision to issue the guidance on April 22, 2024.
The guidance notes that “consumer debt” has been found to include medical debt, student loan and educational debt, and rental arrears. The guidance further explains that when the judgment appears to be for a consumer debt, including actions for medical debt, student loan and educational debt, rental arrears, or credit card debt, a presumption that the 2% rate applies. Any party seeking a default judgment exceeding that rate of interest must make an application to a judge; this rate cannot be entered by clerks. This applies both in civil cases and in housing cases. Specifically, in any residential summary proceedings pursuant to RPAPL §§ 711, 713 or RPL § 228, a clerk may only provide a 2% per year interest rate on any draft money judgment submitted to the court for review and signature, unless the court has specifically ordered otherwise.
NYLAG is eager to ensure that the guidance is comprehensively implemented. If you or someone you know has a consumer debt judgment wrongfully entered after April 22, 2024 at rate exceeding 2% post-judgment interest, please contact us at 212-613-5032.
