NYC Council to take on debt collectors

March 24, 2010 8:42:33 PM PDT
Ulrick Chatelain, 74, of Washington Heights says all of his bank accounts were frozen, but he didn't know why. Turns out, a former landlord had sued him and won a judgment in civil court.

Problem was Chatelain was never notified about the lawsuit.

"I was told to go to court. Go to court where? When? What am I going to say in court?" he said.

For nearly a month, Chatelain had no money to support himself and his wife or to send to his son and granddaughter in Haiti, victims of the horrific earthquake that destroyed much of Port-au-Prince.

"They don't have anything to eat. They were crying," he said. "I couldn't do anything."

New York City Council will vote on legislation on Thursday to stop so-called "sewer service" -- the deliberate failure by process servers to notify a person about a pending lawsuit.

Among the new regulations, process servers will now be required to pass an exam for proper service.

Servers will also be required to use an electronic tracking device such as GPS to prove when and where a person was notified.

Council Speaker Christine Quinn says it's time to professionalize the profession of processing.

"To say this unfair and inaccurate to New Yorkers would be putting it lightly," Quinn said. "It is everyone's constitutional right to get served properly - to know that they have a court filing against them. And at a time, when everyone is struggling to pay the bills, it is cruel to put this additional unjust and undue burden on them."

This bill would also require licensed process servers to post a bond for $10,000 or, if an individual is unable to obtain a surety bond, pay into a trust fund administered by DCA for the purpose of covering unpaid fines and judgments.

Agencies would be required to purchase a $100,000 bond; and

Servers would also need to retain records of each process served for seven years and make these records available to the DCA commissioner upon request.

This legislation will also give victims a "private right of action" or enable them to sue.

The problem is a national one, and the first steps toward action are being done right here in New York City.

Earlier this year, the FTC ordered nine debt-buying companies to turn over information about purchasing and collection practices.

There is also talk of national legislation being drafted to protect consumers against these bad practices.