Every year over 100,000 people in New York are sued on debts such as credit cards, car loans, or medical bills.  Many don’t know they have been sued until they find that their bank accounts have been levied or wages garnished.

This happens because many creditors don’t actually serve a copy of the summons to the debtor.  That may be either due because the creditor doesn’t know where the defendant resides and doesn’t make an effort to find the person, or perhaps they even overtly try not to serve the debtor.  This is known as “sewer service,” and as the name implies, it refers to throwing the summons in the sewer and claiming service on the debtor.

Once the creditor has a judgment by default, because the debtor didn’t respond to the summons, they then find the debtor and his/her assets and grab them.  This practice has gone on for many years; however, as of  October 1, 2014, things will change.  Thanks to new rules issued by Judge Lippman, the chief judge of the New York Court of Appeals, new rules will go into effect to protect New Yorkers from being sued on debts.  

Under the new rules, the court will mail a notice to the person being sued.  If the notice is returned by the post office as undeliverable, a default judgment will not be entered.  In addition, there are other new protections being given to those being sued.

The creditor will be required to provide an affidavit that contains “detailed proof in support of default judgment application, including the validity of the debt at issue and the chain of ownership for that debt.”  Also now required will be the original credit agreement and the most recent monthly statements. 

These new requirements will be a great step forward in protecting those being sued.  Currently, creditors are known to take underhanded actions against defendants.  For example, creditors have been known to sue on debts barred by the statute of limitations. 

Also, often the party suing is not the original creditor, but instead a party that bought the debt for pennies on the dollar.  This often makes it difficult or impossible for someone being sued to defend him- or herself because of a lack of information on the debt.  Furthermore, since a debt may be sold over and over, it could be possible to be sued more than once for the same debt!

Although these new requirements present increased consumer protection, I note that these new rules have been created by the Court and not the New York legislature.  A bill with these protections has been created this year and in past years by the New York Assembly, but not the Senate.  It would be better to see these protections be passed by Albany.

If you live in a state other than New York, you may have more or fewer protections than that offered by New York.  States in the South and in Republican states tend to offer less protection to consumers.