NYC Debt Collection Laws: Collector Rules, Garnishment and Usury in 2026
Short answerPartly. New York has no separate city debt statute. State law, mainly General Business Law § 601, 23 NYCRR Part 1 and CPLR Article 52, protects you everywhere in the state, and New York City adds a license for consumer debt collection agencies. Interest above 25 percent is a felony.
Last verified: November 6, 2026 against the CPLR, General Business Law, Banking Law, Penal Law and Department of Financial Services guidance on nysenate.gov and dfs.ny.gov
Do New York City debt collection laws differ from the rest of the state? Mostly no. The same state rules cover a collector calling you in Buffalo or in Brooklyn, and the city layer is mainly a licensing system. This page explains what collectors may and may not do, how long they have to sue, how much of your pay and bank account is protected, and where the interest rate limits sit.
Key facts
- Harassing contact is barred by
General Business Law § 601. - Consumer credit debts have a three-year limit to sue under
CPLR 214-i; most other contract debts have six years underCPLR 213. - A paycheck deduction is capped at 10 percent of gross income, and also at 25 percent of disposable earnings.
- Civil usury starts above 16 percent a year; above 25 percent is criminal usury, a class E felony.
- Collectors must substantiate a charged-off debt within 60 days of a request under
23 NYCRR Part 1.
New York City debt collection laws: what is different?
The state rules below apply in all five boroughs. New York City adds a licensing layer: the Department of Consumer and Worker Protection licenses debt collection agencies that collect consumer debt in the city (Administrative Code § 20-490, with definitions in § 20-489). A collector that should be licensed and is not can be reported to that department.
New York City: the city does not change the statute of limitations, the garnishment caps or the usury rates. Those are set by state law. If a collector contacts you, check both the state rules on this page and whether the agency holds a city license.
What debt collectors cannot do in New York
Collectors cannot harass you, lie about who they are or add charges the law does not allow. General Business Law § 601 bars a creditor or its collection agent from these practices, among others:
- Pretending to be a law enforcement officer or government representative.
- Collecting fees or costs that are not justly due and legally chargeable.
- Threatening to tell your employer about a claim before a final judgment.
- Telling others about a disputed debt without noting that it is disputed.
- Contacting you so often, at such unusual hours or in such a manner as to harass you.
- Using social media to collect.
Federal law adds protections for most consumer debts, including a validation notice and a 30-day window to dispute the debt. Under the Consumer Financial Protection Bureau’s Regulation F, more than seven calls in seven days about one debt is presumed to be harassment.
Department of Financial Services debt collection rules
The Department of Financial Services adopted 23 NYCRR Part 1 in 2014 for consumer credit debts. It covers debts from credit extended for personal, family or household purposes, and it excludes, among others, creditor employees collecting in the creditor’s name. Its main duties are:
- Initial disclosures about the debt in the first communication.
- Time-barred debt notice: before accepting payment on a debt that may be too old to sue on, the collector must give a clear notice first. For consumer credit debts under
CPLR 214-i, a payment no longer restarts the limit, and the Department does not expect collectors to say otherwise. - Substantiation: for a charged-off debt, the collector must give written substantiation within 60 days of a request and must stop collecting until it does.
- Payment plans: while you pay under an arrangement, the collector must provide periodic accountings.
How long can a collector sue? Statute of limitations
The Consumer Credit Fairness Act of 2021 shortened the deadline for consumer credit debts such as credit cards and medical bills on credit to three years under CPLR 214-i. It also provides that a later payment or acknowledgment does not revive or extend an expired period, a rule that took effect on April 7, 2022.
| Type of debt | Time to sue | Law |
|---|---|---|
| Consumer credit debt | 3 years | CPLR 214-i |
| Most other contract debt, including commercial debt | 6 years | CPLR 213 |
New York garnishment laws: wages and bank accounts
A creditor must win a court judgment before it can take your wages. Then CPLR 5231 limits an income execution: no installment may be more than 10 percent of your gross income, and withholding may not exceed 25 percent of disposable earnings. Nothing can be withheld for a week unless disposable earnings exceed 30 times the minimum hourly wage. At the $17 rate in New York City, that is $510 a week. No amount can be imposed on judgments from a medical debt action brought by a licensed hospital or health care professional.
Bank accounts are protected too. Under CPLR 5222, a bank may not restrain an amount at or below 240 times the minimum hourly wage, which is $4,080 at $17. If your account received exempt payments such as Social Security, veterans benefits, public assistance or unemployment by direct deposit in the prior 45 days, CPLR 5222(h) bars the bank from restraining a further $2,500 as written in the statute. The Department of Financial Services adjusts exemption amounts every three years under CPLR 5205(l), so check its current table. A creditor may serve no more than two restraining notices a year on a natural person’s bank account.
| Property | Exempt amount |
|---|---|
| Cash, vehicle, tools of trade and other personal property | Set in CPLR 5205 and Debtor and Creditor Law § 282; amounts are raised every three years, so check the current Department of Financial Services table |
| Home, New York City and downstate counties | $150,000 in the text of CPLR 5206; the amount is adjusted every three years, so check the current Department of Financial Services table |
Payday loans and usury laws in New York
Are payday loans legal in NY? Not at typical payday rates. The civil usury limit is 16 percent a year (Banking Law § 14-a), and charging more than 25 percent a year is criminal usury in the second degree, a class E felony (Penal Law § 190.40). Fees count as interest. The Department of Financial Services has treated payday loans above these limits as illegal in New York.
| Annual rate | Result |
|---|---|
| Up to 16 percent | Within the civil limit |
| Over 16 percent | Civil usury |
| Over 25 percent | Criminal usury, class E felony |
Loans of $250,000 or more are exempt from the maximum-rate laws except the criminal usury statutes, and loans of $2.5 million or more are exempt entirely (General Obligations Law § 5-501).
Bankruptcy and commercial debt in New York
Personal bankruptcy is filed in federal court, and New York property exemptions such as those in CPLR 5205 and CPLR 5206 and Debtor and Creditor Law § 282 decide what you can keep. Commercial debt is different from consumer debt: 23 NYCRR Part 1 covers consumer credit debts, and the longer six-year deadline usually applies to a business contract claim.
Myths vs facts
| Myth | Fact |
|---|---|
| A collector can garnish your pay without suing. | It needs a court judgment first. |
| A small payment on an old debt is harmless. | It can invite a suit if the debt is still within its limit, and collectors must warn you about time-barred debt. |
| New York City has its own debt collection code. | The city adds licensing; state law sets the limits. |
| All of your bank account can be frozen. | Protected amounts apply to wages and exempt benefits. |
What to do if a collector contacts you
Say a collector calls a Queens resident about a credit card from 2021. The resident should ask for written validation, dispute in writing within 30 days, avoid paying or admitting the debt until the collector substantiates it, and check whether the three-year limit has run. If a suit is filed, respond by the court date, because ignoring it can lead to a default judgment. See our pages on New York labor laws for wage rules and the Money, Business and Consumer section for related topics.
Frequently asked questions
Are payday loans legal in NY?
Loans at typical payday rates break New York’s interest limits. Interest above 16 percent is civil usury, and above 25 percent is a class E felony under Penal Law 190.40.
What is the statute of limitations on debt in New York?
Three years for consumer credit debts under CPLR 214-i. Most other contract debts, including many commercial debts, have six years under CPLR 213.
Can my wages be garnished in New York?
Yes, but only after a court judgment. CPLR 5231 limits withholding to 10 percent of gross income and 25 percent of disposable earnings, with a weekly floor tied to the minimum wage.
Can a collector call me at work?
General Business Law 601 bars threatening to tell your employer about a claim before a final judgment, and contact that is harassing in frequency, hour or manner is prohibited.
Do New York City debt collectors need a license?
Debt collection agencies collecting consumer debt in the city are licensed by the Department of Consumer and Worker Protection under Administrative Code 20-490, and a collector without a required license can be reported to that department.
Is my bank account safe from a creditor?
Partly. CPLR 5222 protects a minimum balance and a further amount for recent exempt direct deposits, and a creditor may serve no more than two restraining notices a year on a person’s bank account.
What changed on this page
- November 6, 2026: Published after checking the statutes and Department of Financial Services guidance listed above. See our corrections policy if you spot an error.
If this affects you
Complaints about collectors can go to the Department of Financial Services, the Attorney General’s consumer frauds bureau, or, in New York City, the Department of Consumer and Worker Protection. For a legal question about your own debt, the New York State Bar Association lawyer referral service can connect you with a New York-licensed attorney. Our editorial policy explains how we research these pages. This article is general legal information, not legal advice.
