New York Commercial Collection Agency
In New York, Prestige Services, Inc. is dedicated to ensuring exceptional and effective commercial debt collection practices for local businesses. Our collection practices follow the state regulation best practices in order to maintain consistency, transparency, and integrity that makes commercial debt collection so vital to financial balance.
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New York Laws Governing Commercial Debt Collection
Several entities oversee commercial debt collection in New York, each with specific responsibilities to ensure ethical, lawful, and fair practices. The most significant of these include the New York State Department of Financial Services (DFS), the New York State Attorney General’s Office, and the Federal Trade Commission (FTC). Key laws, such as the Fair Debt Collection Practices Act (FDCPA) and the New York Civil Practice Law and Rules (CPLR), further regulate commercial debt collection practices in the state.
New York State Department of Financial Services (DFS)
The New York State Department of Financial Services (DFS) regulates the financial industry within New York and plays a critical role in overseeing debt collection practices, including commercial debt. The DFS issues guidelines and licenses for debt collection agencies and ensures they comply with state laws.
Although much of the DFS’s focus is on consumer debt, its policies often impact commercial debt collection as well. For example, DFS’s licensing requirements for collection agencies extend to those involved in B2B debt collection, ensuring accountability and adherence to ethical standards.
New York State Attorney General’s Office
The New York State Attorney General’s Office protects the interests of businesses and consumers by enforcing state laws on unfair or deceptive practices. In the context of commercial debt collection, the Attorney General’s Office investigates complaints against debt collection agencies, including any potentially fraudulent or coercive tactics. While businesses may not receive the same protections as consumers, commercial creditors must still avoid misleading or unfair practices to prevent potential legal repercussions.
Federal Fair Debt Collection Practices Act (FDCPA)
Though the Federal Fair Debt Collection Practices Act (FDCPA) primarily applies to consumer debt, portions of its guidelines impact commercial collections, especially when an agency engages in both consumer and commercial debt collection. The FDCPA prohibits abusive, deceptive, and unfair practices in debt collection, including harassment, misleading statements, and improper communications. Prestige Services, Inc., voluntarily follows FDCPA guidelines to ensure ethical interactions with debtors, avoiding practices that could result in legal liabilities.
New York Civil Practice Law & Rules (CPLR)
The New York Civil Practice Law and Rules (CPLR) outlines specific legal procedures for debt collection, including commercial debt recovery. CPLR dictates how lawsuits for unpaid debts can be initiated, including guidelines for summons, subpoenas, and judgments.
Importantly, CPLR also sets the statute of limitations on debt collection, which is six years for written contracts and four years for oral contracts. Creditors must act within this period to maintain the enforceability of debt and ensure successful recovery efforts.
Statute of Limitations on Accounts in New York
The statute of limitations refers to the period within which a creditor can legally sue a debtor for unpaid debts. In New York, the statute of limitations on commercial debts is typically governed by the type of contract under which the debt was incurred.
Written Contracts: In cases where the debt arises from a written contract (such as loan agreements or purchase contracts), the statute of limitations is 6 years from the date of default or the last payment made.
Sale of Goods: The statute of limitations on the sales of goods is 4 years.
Oral Contracts: If the debt is based on an oral agreement, the statute of limitations is shorter, typically 6years from the breach of the agreement.
Judgments: For both domestic and foreign judgments, the statute of limitations is 20 years and has a 10-year renewable lien.
Accounts Stated: An “account stated” refers to a mutual agreement between a debtor and creditor regarding the amount owed after services are rendered or goods are sold. In New York, the statute of limitations for an account stated is six years.
Once the statute of limitations has expired, creditors can no longer file a lawsuit to recover the debt. However, the debt itself is not erased. The debtor still owes the amount, but the creditor is legally barred from suing to enforce collection.
For more information on New York’s statute of limitations statistics, please see below.
Bad Check Laws in New York
Issuing a bad check—a check that bounces due to insufficient funds—can lead to both civil and criminal penalties in New York. If a business writes a check that cannot be honored, the creditor may have recourse through the courts or by initiating criminal proceedings.
Under New York Penal Law Section 190.05, issuing a bad check is considered a misdemeanor if the person knowingly writes a check with insufficient funds. A creditor can also file a civil lawsuit to recover the debt. If the creditor is successful, the court may award the following:
- The amount of the check
- Additional damages (often twice the value of the check, up to a statutory limit)
- Court costs and attorney fees
Additionally, New York law requires that a creditor provide written notice to the debtor before pursuing legal action. The debtor then has ten days to make the check good. If the debtor fails to do so, the creditor can file a lawsuit or pursue criminal charges.
For commercial transactions, businesses issuing bad checks may also face damaged relationships with vendors and suppliers, which can have long-term consequences for their operations and reputation.
Interest Rates for Commercial Debt Collection
Interest can accumulate on outstanding commercial debts, and New York law establishes guidelines on how much interest can be charged. The rate of interest is typically governed by the agreement between the parties. If the contract explicitly states an interest rate, that rate will apply as long as it is within legal limits.
In the absence of an agreed-upon rate, New York Civil Practice Law and Rules (CPLR) Section 5004 establishes a statutory interest rate of 9% per annum for unpaid debts. This applies to both pre-judgment and post-judgment interest in most cases. The interest begins to accrue from the date the debt becomes due or the date of default, and it continues until the debt is paid in full.
Creditors are advised to ensure that interest rates outlined in contracts are not considered usurious, which would render the agreement void. Under New York law, commercial usury occurs when the interest rate exceeds 25% per annum. Charging interest rates higher than this limit can lead to severe legal penalties, and the debtor may be relieved from the obligation to pay the excess interest.
Contact Prestige Services, Inc.
The use of professional debt collectors can benefit businesses by providing expertise in negotiation and settlement and reducing the likelihood of legal missteps that could result in penalties or damage to the business’s reputation.
As an award-winning commercial debt collection agency licensed in New York, Prestige Services, Inc., offers a variety of exceptional debt collection services to help businesses get money that is owed to them.
Check Laws by Cities in New York State
SUMMARY OF NEW YORK COLLECTION LAWS*
INTEREST RATE
Legal: 16% – Judgment 9%
BAD CHECK LAWS (CIVIL PENALTY)
Face value of check plus two times check amount up to a maximum of $400 on NSF or $750 on “no account” (Demand prescribed by law). GEN.OB.1.1-104.
GENERAL GARNISHMENT EXEMPTIONS
90% of earnings, except 1st $154.50 wk. wholly exempt (only if the person earns minimum wage).
* These are not comprehensive statutes and therefore PSICollect.com and Prestige Services, Inc. disclaims any liability resulting from reliance by any party upon the legality and accuracy of the contents thereof.
