New York Consumer Debt Civil Practitioners—IMPORTANT UPDATES!

For consumer debt claims, both the statutory interest rate and default judgment procedure are being modified.

 Beginning April 30, 2022, when applying for default judgment, proof of the amount due must include “if applicable, a statement that the interest rate for consumer debt pursuant to section five thousand four of this chapter applies.” (CPLR 3215(f))

 That’s the small change. The BIG change is the applicable interest rate, which, effective April 30, is being SLASHED from 9% to 2%. (CPLR 5004)

 Beginning May 7, 2022, the statement of proof must also include chain of title for the consumer debt, which is often sold by the original creditor to a collection outfit: 

In an action arising out of a consumer credit transaction, if the plaintiff is not the original creditor, the applicant shall include: (1) an affidavit by the original creditor of the facts constituting the debt, the default in payment, the sale or assignment of the debt, and the amount due at the time of sale or assignment; (2) for each subsequent assignment or sale of the debt to another entity, an affidavit of sale of the debt by the debt seller, completed by the seller or assignor; and (3) an affidavit of a witness of the plaintiff, which includes a chain of title of the debt, completed by the plaintiff or plaintiff's witness. The chief administrative judge shall issue form affidavits to satisfy the requirements of this subdivision for consumer credit transactions.

 Also beginning in May, requests for default judgment to the clerk must include a statement by plaintiff (or counsel for plaintiff) that the statute of limitations has not expired.

 The statute states that a form affidavit will be available for this purpose, but as of April 4, 2022, none have been published yet.