And Now for Some Good News

Posted by Claudia Wilner

Deborah, a single mother from the Bronx, contacted our NYC Financial Justice Hotline in summer 2014. Her wages as a home health aide were being garnished after two different debt collectors harassed and eventually sued her for the same bogus debt. When we helped her respond to the lawsuits, both companies backed off, unable to produce a shred of evidence that she actually owed the debt. There are tens of thousands of cases like Deborah’s in New York each year.

Here’s the good news: After years of hard-hitting advocacy by New Economy Project and allies, New York has implemented groundbreaking new debt collection rules, including some that go into effect today. The rules address pervasive debt collection abuses like those Deborah and millions of other low income New Yorkers have experienced. Despite notable gaps, the rules are among the strongest in the country and represent a clear victory for economic and racial justice. We are thrilled to see them go live today.

Over the past decade, New Economy Project has focused on abusive debt collection in the context of broader economic discrimination and wealth inequality. We have sounded the alarm over deceptive and fraudulent practices that pervade the debt collection industry, which has siphoned billions of dollars from New York’s low income neighborhoods and communities of color. In two influential reports, The Debt Collection Racket in New York and Debt Deception (co-authored), New Economy Project documented rampant fraud in the debt collection industry – and its discriminatory impact on low income neighborhoods and communities of color.

So what’s in these new rules?

New York’s new rules bar debt collectors from trying to collect unless they have meaningful documentation on hand – including proof that the person actually owes the debt. The rules require nothing short of basic fairness and should knock out a huge percentage of debt collection cases in New York.

The new rules also require debt collectors to inform people that certain types of income — including Social Security and other government benefits, as well as child support and even most of someone’s earned income — are exempt from debt collection.

Today’s rules dovetail with major changes adopted last year by New York State’s court system, which New Economy Project also helped to shape. The court rules will end the fraudulent practices debt collectors have routinely used to obtain debt collection judgments against low income New Yorkers. Our court system will no longer function as a rubber stamp for the debt collection industry.

More must be done to rein in predatory companies and address root causes of debt. Meanwhile, New York State’s rules are a critical step toward ensuring due process and economic justice for New Yorkers. We hope you will join us as we press New York State to enforce and strengthen the rules.