One of the primary reasons why it's so important for borrowers to be aware of their rights under the law is that – under certain circumstances – both state and federal laws protect borrowers from having to repay specific debts. For example, imagine forwarding your hard-earned income to a creditor whom you no longer have any legal obligation to repay. The thought might, very understandably, make you a little queasy. By understanding your rights under the law, you can better ensure that you avoid scenarios just like this one.

For example, New Yorkers who are aware of their rights under the Consumer Credit Fairness Act (CCFA) may be able to avoid paying debts on long-overdue accounts. Understanding this single-state law can, therefore, potentially save you thousands upon thousands of dollars under the right circumstances.

What Is The CCFA?

The Consumer Credit Fairness Act was signed into law in November of 2021 and took effect in the Spring of 2022. It aims to hold creditors to reasonable standards of timeliness and transparency while better ensuring that borrowers aren't unreasonably overwhelmed by long-overdue debts, failures to notify borrowers of their obligations, excessive late fees, and excessive interest charges.

Thanks to the CCFA, those serving as "clerks of the court" are now obligated to mail borrowers a notice in the event that lenders file consumer credit action lawsuits against them. This notice must contain information about the debt in question and proof that the lender who has filed the lawsuit is rightfully owed the amount that has been demanded. This provision of the law helps to ensure that borrowers are not left stunned when they learn that a judgment has been entered against them in a lawsuit of which they had no previous knowledge.

Additionally, the CCFA lowers the state's statute of limitations for pursuing consumer debt. Previously, creditors had six years from a borrower's last debt payment on an account to sue them for non-payment of their obligations. Now, that timeframe is lowered to three years. This provision of the CCFA serves two purposes. First, it compels creditors to pursue legal action in a timely manner in the event that a borrower stops making payments. Second, it helps to ensure that borrowers aren't unreasonably burdened by repeated late fees and excessive interest charges.

Finally, the CCFA helps to safeguard against "zombie debt." Meaning the law takes steps to halt the practice of debt buyers suing to collect balances that have already expired. This way, consumers are less likely to be tormented by an invalid lawsuit that violates the statute of limitations in the CCFA explained above.

CPLR Interest Amendment

Although not technically a provision of the CCFA, an amendment to New York's "Civil Practice Law and Rules," signed less than two months after the CCFA was signed into law, also affects those impacted by consumer credit actions.

This CPLR amendment caps the rate of interest for consumer debt judgments at two percent instead of the previous nine percent cap. Meaning if a creditor sues you and obtains a judgment in your favor, they can only charge you two percent interest on that judgment amount while you're paying off your balance. This is a significant improvement over the previous cap, which came close to allowing lenders to charge consumers a whopping 10 percent interest rate for judgment balances in debts those consumers were already struggling to pay.

What The CCFA’s Most Important Protection Means For You

Generally speaking, the statute of limitations outlined in the CCFA begins to run when a borrower misses a payment. If that borrower makes another payment and then again falls behind on their financial obligation, the statute of limitations resets. This means that most of the time, the statute of limitations by which a creditor can sue you for non-payment starts when you miss a payment. This statute of limitations period can reset again and again if you make sporadic payments on your debt and then miss a payment period anew.

As a result of the CCFA's protections, you're likely protected from being forced to repay a creditor if you've been delinquent in your repayment obligations for a consecutive period of three years or more and that creditor hasn't yet sued you for non-payment. If a creditor tries to demand payment for a debt that has been delinquent for more than three years, check with an attorney before paying it. While you technically still owe the debt, the creditor is likely barred from suing to collect your overdue balance.

Similarly, contact an attorney if a creditor tries to sue you for a debt that is this old. A skilled consumer rights lawyer may be able to successfully argue that the claim is barred by the CCFA’s statute of limitations provisions.

Speak With A Dedicated New York Consumer Rights Attorney To Learn More

If a creditor has sued you for a zombie debt or for any other overdue financial obligation that may be time-barred by the CCFA, connect with our firm to learn more about your rights under the law. Our experienced team believes that legal protections don't do consumers much good if borrowers aren't aware of what their rights are and how to exercise them. As a result, we're proud to offer a free initial case evaluation to anyone who wants to know more about their legal options.

If you're struggling with debt or intimidated by creditors, you don't have to navigate this inherently stressful situation alone. Our legal team can advocate aggressively on behalf of your rights and interests. Most people struggle with debt at one time or another. There is no shame in asking for help when you need it. For a free initial case evaluation, connect with the Law Office of Simon Goldenberg, PLLC, by calling 888-301-0584 or contacting us online. We look forward to speaking with you.