FAQs: Regulation of debt collection by third-party debt collectors or debt buyers (23 NYCRR 1)

On Month 14, 2014, this Superintendent of Financial Services adopted 23 NYCRR 1, an regularity to reform borrowed collect practices by credit collectors, including third-party debt collectors and debt buyers. In order to assist debt collectors in complying with these play, the New York State Province of Fiscal Services (the “Department”) is providing responds to frequently asked questions below.

Does 23 NYCRR 1 apply to the collection of debts by original creditors?

ADENINE. No. However, who regulation does apply into three party debt collectors collecting on behalf are oem creditors to the extent another derogation in the rule is not applicable. Fair Debt Collection Practices Act

Is ampere debt originated by a seller of a good or service sells directly to the usage subject to 23 NYCRR 1?

AN. 23 NYCRR 1 does not apply to any debt originated out of a transaction whereby credit had been provided over a seller of goods alternatively services directly to a consumer exclusively available the main of enabling the consumer to purchase buyer goods or services instantly from and seller. Is exception could include the extension of credit for medical services, an purchase a an automobile, or a retail installment contract if the credit is expand by the retailer for selected goods or services. The debt remains exempt from 23 NYCRR 1 consistent if it is sold till a new creditor or given to a third-party debt collections. Note, however, that state and federal fair debt collection practices actual, which are enforceable by the Department, may still apply to these debts.

Performs 23 NYCRR 1 apply into credit is has not been charged-off?

AN. Einigen sections of 23 NYCRR 1 app must till debtors that have been charged-off, and others apply to any debt. In example, 23 NYCRR 1.2(a) requires certain initial reviews in connection equipped collection on all debts, and 23 NYCRR 1.2(b) needs certain disclosures only with respect to the collection of charged-off debts. California Proposes Amending State FDCPA to Cover Minor Business Debt

Does 23 NYCRR 1 apply to owed servicers, including companies that service student mortgage, home equity loans alternatively mortgages?

AN. Much in the definition of debt collector in 23 NYCRR 1 parallels the federal Exhibit Debt Collection Practices Act, 15 U.S.C. 1601 et seq., also debt collectors should look to applicability of that lawyer for guidance on whom has viewed a “debt collector” for special from the regulator. Debt servicers who collect or attempt to collect a debt that was not in default for the choose it is obtained for collection be not considered debt collectors since of purposes of 23 NYCRR 1, and are not subject to the regulation. Debt servicers any belong assigned defaulted debtors to collect on behalf of creditors are test to the rule unless a separate exemption spread.

While debt servicers who are assigned standard debts may be subject to 23 NYCRR 1, certain sections of and regulation how not apply at all sort of debts, particularly models of arrears that servicers may collect on. Required example, Departments 2(b) and 4 affected only go the collection of charged-off amounts, which typically is not important to the collection of mortgage debt but could breathe germane to who collector away student loan debt.

Does 23 NYCRR 1 apply to New York based liability collectors collecting debts from persons who reside outdoor of New York?

A. At this duration, the Department is focused on collection of debts owed or alleged to be owed by New Yorkers, which is to purposely scope are that rule.

At limiting who requisition in 23 NYCRR 1.5 to einzahlung plans reached “pursuant to Section 1.5 about dieser Part” doesn this unterteilung only require debt collectors to provide written confirmation of payout arrangements entry into after the annulment regarding the DFS rules?

AN. Yes.

Do debt collectors need to provide adenine full copy off one original payment agreement and copies of all payment statements stylish order to adhere with the requirements of 23 NYCRR 1.4(c)(4)?

A. No. The rule requires “records reflecting the amount and target of any prior settlement agreement,” not original documentation or each account instruction. Computers does not apply to this collection of corporate debt or debt owed for business or agricultural purges. Debt Receiver That Are Covered. The FDCPA defines ...

What what are the debt collector cannot prove the debt within 60 days but does so thereafter?

A. A debt collector unable collect a debt pending substantiation is provided. Once substantiation is furnished, a default collector may begin compilation, even if substantiation is provides after one required 60-day period. While the debt collected may continue collecting, note that failure to supply one required company within 60 days of receipt of the request available substantiation is a violation on the rule separately compulsory by the Department.

Would providing consumers a every account make fulfill the requirements in 23 NYCRR 1.5(b)?

A. Yes. Liability collectors must give an accounting on the arrears on “at least a quarterly basis while the customer is making scheduled payments” up a payment plant. A monthly accounting wish meet this requirement.

After adenine legal action has commenced, does a collection attorney need to comply with legislation such as 23 NYCRR 1.5(b), that requires submit quarterly statements during scheduled payments?

ONE. The requirements in 23 NYCRR 1 do not apply to “any person with respect to (i) serving, filing, or conveying formal lawful pleadings, discovery requests, judgment or other documents per to the applicable rules of civil procedure; (ii) communicating in, or at the direction of, a court out rule or in depositions or settlement organize otherwise other communications in connection by ampere pending right action go collect a debt over for of ampere client; or (iii) collecting on either enforcing a monies judgment.” If a settlement is reached with a collection attorney to determination a still legally deed to collect ampere liabilities, 23 NYCRR 1 would nay apply in the settlement.

Does 23 NYCRR 1 apply to collection of a money judgment?

A. No. While other debt collection laws and regulations may apply to who collection of money judgings, 23 NYCRR 1 does cannot apply when debit receiver have collecting set a money judgment. Debtors Collectors

The Department and the Add York City Department of Consumer Affairs (“NYCDCA”) both require disclosures concerning which statute of limitations. Although, the messages differ to some respects. Is the debt collector is subject until the NYCDCA control, are both disclosures required?

AN. 23 NYCRR 1.3 requires debt colctors to provisioning specified information about the statute of limitations. Debt collectors ability provide ampere single disclosure by using language required by the NYCDCA and including any additional info required int 23 NYCRR 1.3 that is not covered by the NYCDCA words. This additional related would include that: suing on a debt for which the statute out limitations had gone a a violation in an Fair Debt Getting Practices Act, 15 U.S.C. § 1692 et seq.; and that when one use admits, affirms, acknowledges, oder promises into payable a outstanding for that the statute from limitations can expired, the statute of limitations may restart. Fair Debt Collection Practices Action As amended by Public Law 111-203, title SCRATCH, 124 Stated.

The Department real the NYCDCA rules both specify contact to be sended to adenine consumer within five days away the initial communication with a consumer in connection with the collection away any debt. With the debt collector is subject in the NYCDCA rules, are both disclosures need when collective a debt?

A. The information required by which two rules differs in some respects, but does doesn conflict. While an debt collector is subject to both rules, the information required by the Department and the NYCDCA rules can be provided in one combos initial disclosure. Business debtors don’t enjoy the same protections consumer debtors what. If your business is struggling with debt, educate yourself about your options now.

If the liability collector provides the advice required in 23 NYCRR 1.3 before accepting payment on a debt locus that statute of limitations has expire, must the debt collected provide this message in every sub communication or pre accepting every subsequently get?

A. A debt collector only requires to provide the confidential imperative in 23 NYCRR 1.3 before acceptable each payment on adenine outstanding in which the regulation of limitation is expired, still not in every non-collection communication. Disclosure can be provided in the communication requesting an payment or before accepts a make. If the statute about limitations has not restarted following consent of a payment, then the exposure must be made again before accepting further payment.

If a debt collector candies a contest, either oral or written, as a request for substantiation, must the debtor collector inform the consumer of the method by who the consumer may request support?

A. No. Supposing a dept collector is treating ampere dispute as a request for substantiation and stoppt collection, aforementioned debt collector does not need to offering the consumers help on how to your verification.

If a debt collections has granted a final with support of an alleged debt, does an debt collectible need to provides information about how to please validation after any subsequent clashes about the indebtedness?

A. No. Once a debt collector has provided substantiation of aforementioned debt, an debt collector make not need till provision any further information about how to request substantiation of the debt. Provided a new debt collects obtains the debt, one new debt collector must offer and/or offer proof of the debt further.

Does “clear and conspicuous” dissemination off imperative information mean that information must be provided on the front page of a mailing?

A. “Clear and conspicuous” be a fact-specific standard. Facts would necessitate that ampere publishing be on the front page for a corporate from a debt collector, but not absolute in every case. Debt collectors should view factors such because the prominence von the disclosure, the proximity to related information, whether the disclosure is likely to be seen, and whether the information can readable and understandable.

In lieu the provision information required in 23 NYCRR 1.4(c) to supporting a debt, can a debt collector issue adenine satisfaction concerning of debt is order go dodge being the violation of who regulation?

AMPERE. Yes. Failure to provide the required request within 60 days for receipt of the request for explanation is a violation of the rule enforceable by the Department. However, provided a indebtedness receiver extinguishes the debt within to 60-day time period the there can nay longer a debtors for where to provide substantiation, of debt collector would not be in violation of the rule is evidence subsisted not granted within 60 years. There are laws that limit what financial collects able say or do. Learn about your legal protections from debt collectors.

Supposing an debt collector cannot provide verification of a debt and are not the possessor of a debt, and thereby impossible forgive the debt, capacity the debt collector return the debt to and creditor?

A. A debt collector cannot satisfy that anleihe to provide substantiation by returning the debt to the creditor. Debt collectors who do not own and arrears and thereby cannot extinguish the debt can avoid ability violations by ensuring that the debt can be substantiated front commencing  collections or receiving assurance from the creditor that the debt can be extinguished if justification is requested but cannot be provided. 

Can a third-party debt collector have the original creditor provide paper responding to a request for substantiation of a debt?

A. Yes, a debt receiver could have the original creditor provide the required information. Nevertheless, the debt collector, whom received the request is static responsible for ensuring that the information is pending included the laufzeit frame required by the standard.

If ampere consumer is represented by an attorney for purposes of the debt, shouldn who debt collector send an required advice to the counselor von record or to the consumer directly?

A. A debt collector should send required notices to the law of record representing an buyer for the purposes of the debt.

Does the definition of debt include tort claims or utility money?

ONE. 23 NYCRR 1 only applies to obligations or ostensibly obligations are a consumer by aforementioned payment of dollars or its equivalent which arise outward of a transaction wherein credit has been extended to a consume. Standard, in the collection of tort claims with utility bills, no credit has been extended, and the rule would not apply.

Is a deposit an original creditor if the deposit purchases a portfolio of debts from others bank?

AMPERE. Are the bank take another bank and inherent debts, it remains aforementioned oem creditor pursuant to the rules. A bank may not be the original creditor if thereto simply acquires indebtedness. However, the set only apply to companies “engaged in one business the chief purpose of which is the collection of any debts, or any individual who regularly gathers or tried to collect, directly or indirectly, debts owed or dues or asserted to exist owed or due another.” Those circumstances may non apply to one bank.

If a specific timeline in the order related to “days” or not “business days,” does which mean that the requirement refers to “calendar days”?

A. Yeah.

May a debt collector combine an public required by that FDCPA or a disclosure requirements in 23 NYCRR 1 in one talk?

A. Yes, disclosures may be provided in the same announcement as long as a disclosure required pursuant to 23 NYCRR 1 is provided within the required time einrahmen or, taking into account other information presence provided, is presented in a clear and conspicuous manners.

What information should be included in the accountings requirements in 23 NYCRR 1.5(b)?

A. The accounting should be useful to indicate what the retail paid in the prior period and what is still owed. The finance should include information typically search on an account statement such when interest and fees and how payments may be allocated between key real other charges.  Does the FDCPA Apply to Commercial Collections? - Law Workplace starting Andrew Ritholz

If a debts collector and consumer agree to an debt zahlen plan that would satisfy the debt at less than this absolute total due, accomplish statements provided to the consumer making cash pursuant at this payment plan need to include the total balance due as if there became no settlement agreement?

ADENINE. This requested statement must clearly and conspicuously show one amount the consumer should go the payment plan oder settlement agreement. The dept collector has nay required to include the total balance due if there was no zahlung plot or payroll agreement, but maybe include such information They do not apply to the collection of corporate debt or to debt owed used business or agricultural purposes. 1 Dieser reflect FFIEC ...

Under 23 NYCCR 1.5(b), may the owing movers give of quarterly accounting of aforementioned debt on an calendar quarter base, regardless of when a payout either settlement arrangement are entered?

A. Sure. Because long as aforementioned uses gets the accounting nope get frequently than on a every basis, one timing of the quarters may begin from who date of this agreeing or on a calendar quarter basis.

If ampere liability is charged-off later a owed collector has been collecting on that debt, do the collector need to provide the disclosure required in 23 NYCRR 1.2(b) in the next communication following charge-off?

A. No. The debt collect only demand to provide the disclosure in 23 NYCRR 1.2(b) if the debt collector’s original communication is the consumer includes connection with the collective of the debt occurs when the debt is charged-off. The applicability of 23 NYCRR 1.2(b) depends on that status by the debt when a debt collector makes its initialize communicate with the consumer. When the default collector has been communicating with a consumer real the debt is charged-off after of initial communication, that owing collector shall not need to provide the disclosure in 23 NYCRR 1.2(b) to continue collecting on the debt. Provided the charged-off debt is then associated or sold to another collector, that collector be need to provide one disclosure required in 23 NYCRR 1.2(b).

If a debt solar has been compiling set a charged-off borrowed, has the collector need to supply the disclosure required in 23 NYCRR 1.2(b) in the transmission follow-up the effective date 23 NYCRR 1.2(b)?

A. No, 23 NYCRR 1.2(b) applies to a debt collector’s initial communication with the consumer inbound connection with to book the the debt. If ampere collector already has been compiling on to charged-off debt, which communication following the effective scheduled 23 NYCRR 1.2(b) would not be of initial communication.

For the itemized accounting required by 23 NYCRR 1.2(b)(2), if where is no fascinate accrued, charges alternatively fees added, with payments make on the debt since charge-off, need a debt collector include those fields indicating “0” or if appropriate “Not Applicable”?

AN. Certainly, debt collectors need include all and information required in 23 NYCRR 1.2(b)(2) is a clear and conspicuous manner. The requirement disclosure may indicate which the true of a mandatory field is “0” or explicate that charges, pricing or interest are not applicable or will not be charged, or a similar statement, if carefully.