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Statute of Limitations on Debt Collection In New York

July 24, 2016

If you are on either side of a debt collection case, you might find yourself in court fighting against or asking for a judgment that the debt must be paid. One of the most important things to keep in mind in these types of cases is determining what the statute of limitations is for the type of debt involved and a business attorney can help.

Definition of Statue of Limitations

The statute of limitations is simply a rule that sets a deadline for somebody to file a lawsuit or, in criminal law, to charge someone with a crime. In debt cases, it’s used as a defense to avoid a judgment ordering the debtor to pay up. The law that governs the statute of limitations on debt collections in New York can be found in Article 2 of the state’s Civil Practice Law and Rules (CPLR).  The statute spells out the amount of time the debt collector has to file a lawsuit to collect what’s owed.

Different Types of Debt Collection Cases Covered

Different types of cases require different types of debts. For example, Section 211 of the CPLR allows for a 20-year statute of limitations to collect on alimony, maintenance and child support. Section 212 creates a ten-year statute of limitations to recover real property, annulment of letters of patent or for a mortgage company to redeem a mortgage. Under Section 213-a of the CPLR you have four years to recover payment for a rent overcharge. In such cases, the statute begins to run at the time of the first alleged overcharge. You have three years to collect to recover chattels, or personal property other than real estate; damages for injury to personal property; or damages for malpractice claims other than medical or dental malpractice under section 214.

The section of the CPLR that is going to apply in a large number of debt collection cases is section 213. This section sets up a six year statute of limitations on contracts. This could apply in cases involving credit card debt. Section 214 also applies in cases involving sealed instruments, which are written agreements that are signed and sealed by two parties, binding both of them. Actions based on mistake, actions by a corporation against one of their directors and actions based on fraud are also covered by section 214.

Other Issues Related to Statute of Limitations

Despite the six-year statute of limitations that covers contracts such as those involved in credit card cases, parties in such cases should be aware of other factors that could play into these cases. Section 202 of the CPLR states that if a cause of action which gave rise to the debt collection suit were to arise outside of New York state ,the statute of limitations of the outside state would apply. That’s exactly what happened in a case decided by the New York Court of Appeals, the state’s highest court, which allowed the three year statute of limitations in Delaware to apply rather than New York’s six years in a credit card debt case because the bank that issued the credit card was located in Delaware.

Finally, creditors and debtors should pay attention to how the statute of limitations is computed, which is covered by Section 203 of the CPLR. The statute begins to be computed from the time the cause of action arises. Debtors should watch out for situations where they resume paying off a debt that hadn’t been paid for a while because that might restart the statute of limitations for the creditor.

New York’s statute of limitations in debt collection cases may work in your favor or work against you.  Either way, you should know your rights. The law office of business attorney Mikel J. Hoffman can advise you on debt collection issues and business law. Call us now, or fill out our form to get a free consultation.

The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding creditors or any federal or state tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. 

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