New York City Debt Collection Defense Attorney

Do I Have to Pay the Creditor's Attorneys' Fees if I Lose My Credit Card Lawsuit?

The Basic Rule: No Automatic Attorney's Fees

In New York, attorney's fees are not typically recoverable damages unless there's a specific contractual agreement or statute. This is known as "the American rule" (Green Harbour Homeowner's Ass'n, Inc. v. G.H. Dev. & Constr., Inc., 763 NYS2d 114 [NY App. Div 2003]).

Debt Collectors' Claims for Attorney's Fees

Debt collectors my claim attorney's fees in cases involving credit card agreements or medical services. But in New York, specific criteria must be met for such claims to be valid.

Key Case Law: Citibank (South Dakota), N.A. v Martin

The case Citibank (South Dakota), N.A. v Martin (11 Misc 3d 219 [Civ Ct, New York County 2005]) clarified that a valid agreement, an affidavit, and a detailed attorney's affirmation are necessary for claims of legal fees.

Limitations Under Retail Installment Sales Act

New York’s Retail Installment Sales Act limits attorney's fees in credit card cases to no more than 20% of the amount due (NY Personal Property Law § 413[5]).

Evidentiary Burdens Aid Consumers

Moreover, a plaintiff must produce admissible evidence of a valid contract, entitling them to any amount of fees. As debt buyers often lack adequate documentation, demanding proper authentication frequently thwarts claims for fees and broader recovery.

Even plaintiffs presenting seemingly applicable contracts rarely furnish the attorney affirmations and evidence required by Martin to substantiate a right to legal fee reimbursement.

Use Reciprocal Fee Laws Against Overreaching Collectors

If a credit agreement or contract allows the creditor or debt collector to recover attorney's fees when they prevail, reciprocal fee statutes in 10 states empower consumers to do the same. When the consumer successfully defends against the collection lawsuit under these laws, they can recoup their legal costs.

Reciprocal fee states include California, Connecticut, Florida, Hawaii, Montana, New Hampshire, New York, Oregon, Utah, and Washington. So if a credit card company includes a term allowing them attorney's fees when they win in court, the consumer has an equal right per the reciprocal statute if the creditor loses. Even if the consumer argues the underlying contract is invalid or inapplicable, the reciprocal fee law still often applies since the collector initiated the action claiming a contractual basis.

Conclusion: Robust Consumer Protection

New York’s laws provide strong protections to consumers in debt cases, particularly regarding claims for attorney's fees by collectors.

Three Key Takeaways:

  1. Evidence is Essential: Collectors must provide concrete evidence for attorney's fees claims, including a contract and detailed affirmation.
  2. Know Your Rights: Understanding these legal principles can empower consumers in debt collection cases.
  3. Limits on Collectors' Claims: The law may cap attorneys' fees and require strict proof for such claims, offering a layer of protection to consumers.

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