Daniel Gershburg

Here’s the deal.  Tons of clients have been coming into the New York office recently complaining about getting sued for alleged credit card defaults from more than 7 years ago!  Thats right, try and remember what you purchased in October 2000.  You cant? No problem.  Just pay the collection agency some money (with about 8 years worth of interest) and its gone.  Never mind that you checked your credit report and its now showing.  Never mind that you dont remember ever being served with a summons in New York.  It’s getting ridiculous.  

A few things you should know.

1. Six Year Statute of Limitations-  If they don’t sue you within 6 years AND you actually did have a debt and you defaulted, they’re out of luck…so don’t pay until you speak to someone who knows about this practice.  

2. If the debt is valid, and they did everything right…they will take a TON less than what they claim is owed.  They bought a debt of $3000 from another collection agency for pennies on the dollar.  So you should easily be able to get a large reduction in the amount you have to pay back.  I could care less what they say on the phone to you.   The “consumer collection specialist” was working at a Kinkos about 2 months prior (not that there is anything wrong with that) and she/he is not a specialist at anything.  They have scripts.  If they say no to the deal, try and call again.  Keep persisting.  We usually are able to get a significant reduction in many cases (no guarantee whatsoever of future results) by speaking directly to the attorneys involved).

3.If you didn’t get served, you don’t have to pay.  They’ll likely try and freeze your bank accounts and garnish your wages even after all these years.  There are many ways to stop them from doing this in the New York City court system.

Look, we all know the economy is bad, and New York City is no exception.  The collection agencies will be working harder than ever to try and collect money and convince people that they actually owe a debt when the people don’t know if they do.  Make sure you protect yourself.  You work hard for your money and there is no reason to give it up without a fight.

The common conversation I have these days in my Brooklyn law office goes like this ” Hi, the New York Civil Court entered a judgment against me and now some collection agency is threatening to garnish my wages and freeze my bank account in Brooklyn….also I was never served with any summons and complaint”

It’s happening more and more in New York courts, and my past blogs have dealt with how and why.  But here are some things you should know.

Creditors go after your money by getting a “default judgment” against you.  What that usually means is that because you don’t show up to court, they are able to enter a judgment, give it to a New York City Marshall, and free your bank account and/or garnish your wages, up to 10%.

Creditors can also send you notices that look like they’re from court when they’re really not.  (By the way, its against Federal law to do that so make sure you keep copies of those notices.)  Their hope is that you contact them because it restarts the statute of limitations.  Lets say your Citibank debt is 5 years 11 months old.  The creditors only have up to 6 years in New York law to collect on that debt.  If you contact them on year 5 month 11 day 28, guess what, you just RESTARTED the statute of limitations.  So don’t do it.  

The other solution to stopping this madness of freezing your bank accounts is to Vacate the default judgment, which must be done in court.  I can, and will, devote a separate blog to this, but the gist is that you have to go into court and argue why the judgment entered is wrong, and why you’re not responsible to pay the full (or any amount) of the judgment.  You can try and do it on your own, and not to toot my own horn, but its better that an attorney do it for you.  Collection law firms like Kirschenbaum & Phillips, Mel So. Harris & Associates, and Rubin & Rothman deal much differently with an attorney than they do a debtor.    

Daniel Gershburg Esq., is a Bankruptcy & Real Estate attorney serving  clients in Brooklyn, Queens, Manhattan, Staten Island, Long Island and Westchester.  Mr. Gershburg has given lectures and presentations to both attorneys and the community at large surrounding Bankruptcy and financial advocacy in the New York City area. He is a proud member of the National Association of Consumer Advocates.   Currently he is working on his first book giving practical advice about repairing troubled credit and how to improve credit post Bankruptcy.