Requires a principal creditor to send a notice of delinquency to the debtor and co-signer of an account

Title of bill

An act to amend the general business law, in relation to notice of delinquency requirements

Purpose

To require a principal creditor to send a notice of delinquency to the debtor and co-signer of an account.

Summary of provisions

Section 1 amends section 600 of the general business law by adding new subdivision 4. Subdivision 4 (i) defines the term co-signer and their role in relation to the debtor. Subdivision 4 (ii) states that in the case of a consumer credit account becomes obligated under the agreement as a co-signer with respect either to all purchases and loans, or a specified maximum dollar amount of purchases and loans that will be obtained from time to time pursuant to the agreement whether or not it is contemplated that the co-signer may receive any of the property, services or money to be obtained. This does not include a seller, holder or lender who becomes obligated to an assignee of such party's rights or a joint applicant for credit who is intended to be primarily liable under the agreement.

Section 2 amends the general business law by adding new section 601-a which obligates every principal creditor shall send a notice to the last known address of the debtor advising them of a delinquency on his or her account. A copy of this same notice will also be sent to the co-signer of such account.

Section 3 establishes an effective date of January first succeeding the date on which it shall have become a law.

Justification

Current law only requires that the debtor be notified in delinquency situations and the co-signer is forced to later reap the repercussions. This legislation would obligate all creditors to notify the co-signer as well of any delinquency by the debtor so that all parties involved would be informed and the co-signer can understand what they may liable for if the debtor continues to default on their payments. Since a co-signer would be held accountable for any payments that the debtor has defaulted on, it is believed that an immediate notification of delinquency would allow them to work out any problems with the debtor prior to the co-signer obtaining responsibility for the debt.

Legislative history

This is a new bill.

Fiscal implications

None.

Effective date

This act shall take effect on the first of January next succeeding the date on which it shall have become a law.