Frozen Bank Accounts / Judgments
Some consumers’ worst nightmares can come when they wake up one day and find their bank account frozen, or their account wiped out by a judgment from a collection action. These actions come typically in the form of credit card debts, auto loan debts or other unsecured loan obligations. The easy cases are when a consumer knows he/she owes the money, and the creditor has simply left him/her alone for years. In these cases however, consumers may still dispute the amount in question even if the underlying loan is valid.
Consumers should be aware that the Statute of Limitations in New York for Breach of Contract or an Account Stated is six (6) years. So if the creditor, the debt buyer, or other successor entity to the original creditor, sues the consumer beyond the six-year period, the consumer has a relatively easy path to dismissing the case, even if the debt was valid. However, creditors rarely forget this time limitation, and sue on time.
One misconception by consumers is the time limitation on a judgment. That period is ten (10) years and can be renewed easily by the creditor for another ten years. So if the creditor has a judgment, the 6-year limitations period does not apply and has presumably already been satisfied.
The harder cases are when all or part of the debt is not valid, or worse yet, is a product of identity theft. The responsibility for an account that does not belong to the consumer should normally be easy to get out of. But there is a process and the consumer still has to go through it. Normally, depending on the amount of the debt in and around New York City, the consumer may need not a lawyer in this context.
One of the biggest issues over the years is the challenge to credit card companies, debt collectors and buyers, hospital and medical bill collectors and mainly their process servers for not properly serving consumers with the initial lawsuit papers (i.e. “sewer service”). This abuse allows them to obtain quick judgments against a consumer whether or not the consumer is actually the right person sued, or that person truly owes the alleged debt. A consumer may first learn of the debt, whether valid or not, when their bank account is frozen or their wages are garnished, or some other asset taken by enforcement of the illicit judgment. Our New York City and Long Island consumer fraud lawyers have handled numerous cases to reverse these judgments, put the consumer back into a negotiating position, or dismiss the debt entirely. In some instances, the collector has frozen "exempt" funds e.g. Social Security or Veteran's Benefits. This is also an illegal practice.
One such debt collection law firm was guilty of multiple abuses in its debt collection enforcement efforts and was closed. Mel Harris & Associates.
Consumers actually filed numerous actions against the law firm under the Fair Debt Collection Practices Act (FDCPA), a federal law that governs such companies and punishes them for violations. Mel Harris & Associates was guilty of the pattern and practice of sewer service. But that law firm was not alone. Many law firms and their agent process servers have been found liable for the same pattern failure to serve consumers with lawsuit papers paving the way to quick judgment.
There is normally a great chance of success at at least getting the Court to vacate a default judgment. The law’s preference is to resolve a case on its merits and not because a litigant missed a court appearance. Judges are loathe to dispose of a case in such a manner and we have been successful at getting the judgment creditors back to the table to negotiate away a bad debt.
The Kupillas, Unger & Benjamin, LLP defends debt collection and enforcement claims New York City’s five boroughs, including New York, Brooklyn, Queens, Kings, Bronx, Staten Island (Richmond ) counties, Long Island’s Nassau & Suffolk Counties, Westchester, Orange, Rockland and certain up-state New York counties.