By:Â Robert J. Nahoum
New York Attorney General Eric T. Schneiderman announced on Thursday, May 8, 2014 that his office reached a settlement with two of the largest debt buyers in the U.S. – Portfolio Recovery Associates and Sherman Financial Group (bringing debt collection lawsuits as Resurgent Capital Services LP). Under the terms of the settlement, Portfolio Recovery Associates and Sherman Financial Group have agreed to pay a combined $475,000 in penalties and vacate roughly $16 million in judgments.
According to Attorney General Schneiderman’s office, the two debt buyers were bringing improper debt collection actions against New York consumers. In particular, the debt buyers were accused of continuing to collect on default judgments after the state changed applicable debt collection rules in 2010 which required that, in order for an action to be timely filed, it must be commenced not only within New York’s own statute of limitations, but also within the statute of limitations of the state where the cause of action accrued.
“Debt collectors must follow the same rules the rest of us do when bringing lawsuits—in this case, suing for debts that were not enforceable in the first place,†said Schneiderman.Â
In addition to the penalties and vacatur of judgments, the companies agreed to change some of their debt collection practices including:
Disclosing in any written or oral communication with a consumer about a debt that is outside the statute of limitations that the company will not sue to collect on the debt.
Disclosing in any written or oral communication with a consumer about a debt that is outside the date for reporting the debt provided for by the federal Fair Credit Reporting Act that, because of the age of the debt, the company will not report the debt to any credit reporting agency.
Alleging certain information relevant to the statute of limitations in any debt collection complaint filed by the company, such as the name of the original creditor of the debt, the complete chain of title of the debt, and the date of the consumer’s last payment on the debt.
Submitting an affidavit with any application for a default judgment specific to the statute of limitations that, among other things, attests that after reasonable inquiry, the company or its counsel has reason to believe that the applicable statute of limitations has not expired.
If you have a judgment against you from Portfolio Recovery Associates, Sherman Financial Group or Resurgent Capital Services LP you should speak with a consumer attorney to see if the judgment should be dismissed.