Credit card debt affects thousands of individuals across New York, often leading to overwhelming financial pressure and legal consequences. If you’ve missed payments and your balance continues to grow due to high interest rates and penalties, you may be exploring debt settlement as a possible solution. What many consumers don’t realize is that the outcome of the settlement process can be significantly improved when it’s handled by an experienced attorney—particularly one who understands consumer protection laws and litigation in your state.
Below, credit card debt settlement lawyers at Law Office of Simon Goldenberg, PLLC provide a clear legal perspective on settling credit card debt, explain the negotiations process, and outline how a lawyer can protect your interests under both federal and state laws.
Understanding Credit Card Debt Laws in New York
When a credit card balance becomes delinquent, typically after 180 days of nonpayment, the account is either charged off by the original creditor or sold to a third-party debt buyer. Under the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., debt collectors must follow specific rules when attempting to recover payment. Violations of these rules—such as contacting you at unreasonable hours, making threats, or misrepresenting the debt—can expose the collector to liability.
In New York, the Department of Financial Services (DFS) requires additional disclosures under 23 NYCRR 1, including the right to request documentation verifying the debt and the age of the account. Debt collectors must also send written disclosures when attempting to collect debts that are past the statute of limitations for legal action.
The statute of limitations for filing a lawsuit on a credit card debt in New York is six years under CPLR § 213. However, even time-barred debts can still be collected voluntarily unless you assert your legal defenses or rights—another reason why attorney involvement is crucial.
What Does Credit Card Debt Settlement Really Involve?
Debt settlement is the process of resolving a debt for less than the full balance owed. The term is often used by non-attorney settlement companies, but when conducted through legal counsel, the process takes on a more sophisticated and strategic tone. Unlike generic settlement services that simply contact creditors with informal offers, an attorney will evaluate whether the debt is valid, verify the amount, determine if the debt is enforceable under applicable law, and assess whether your rights have been violated.
For example, if a debt buyer cannot prove the chain of title from the original creditor, or if the debt was sold multiple times without the proper documentation, the claim may be unenforceable in court. In litigation, this is often the central issue.
How a Lawsuit for Credit Card Debt Impacts Your Settlement Strategy
When creditors sue for unpaid credit card debt, they typically seek a default judgment if the consumer fails to respond. Under CPLR § 3215 in New York, a creditor may obtain a judgment without a trial if no answer is filed. That judgment then allows them to garnish wages, freeze bank accounts, and issue property executions under CPLR § 5230.
A judgment carries interest at the statutory rate of 9% annually in New York (CPLR § 5004). These interest rates are often higher than the original contractual rate, increasing the pressure on the debtor.
Legal representation can change the trajectory of this process. A credit card debt lawyer can file an answer, assert affirmative defenses (such as lack of standing, improper service, or statute of limitations), and negotiate a settlement while the case is pending. In some instances, attorneys can even move to vacate default judgments under CPLR § 5015 if the consumer was never properly served.
Why Hiring a Lawyer Is Better Than Using a Debt Settlement Company
Many consumers are lured by promises from debt settlement companies offering to negotiate large reductions in credit card debt. These companies often charge substantial fees, ask consumers to stop making payments (which increases the risk of a lawsuit), and have no legal authority to represent individuals in court.
In contrast, a licensed attorney can:
- Assess the legal merit of the debt. Attorneys examine whether the claim is enforceable, whether interest and fees have been calculated lawfully, and whether the debt collector possesses admissible evidence in court.
- Defend against lawsuits. If you’ve been sued for debt, an attorney can appear in court, conduct discovery, file motions, and assert defenses.
- Negotiate from a position of leverage. Creditors and collection law firms understand that when a consumer is represented by a lawyer, they may face more procedural hurdles and a lower likelihood of quick judgment. This often results in more favorable settlement terms.
- Advise on exemptions and asset protection. In New York, for example, certain assets are exempt under CPLR § 5205, and additional protections exist for income such as Social Security, unemployment, and pensions.
When to Contact a Debt Settlement Attorney Immediately
An attorney's role becomes particularly vital in the following situations:
- Being sued by a creditor or debt buyer. If you’ve received a summons and complaint, do not ignore it. Legal deadlines are short—typically 20 to 30 days to respond depending on how service was made.
- Old credit card debts being reactivated. Making a payment or acknowledging a debt can restart the statute of limitations in New York. An attorney can evaluate whether responding to a collection letter could expose you to legal risk.
- Experiencing debt collection harassment. Under the FDCPA and New York General Business Law § 349, consumers have a right to be free from deceptive and abusive practices. Legal violations can provide leverage in settlement negotiations or even lead to damages.
- Unclear debt ownership. If your debt has been resold multiple times or you are unsure who owns the account, a lawyer can demand the necessary documents and determine whether the entity trying to collect actually has the legal right to enforce the claim.
- Enforcement of a judgment against you. If a judgment has already been entered, an attorney can assess whether the judgment was validly obtained and, if appropriate, file a motion to vacate. Lawyers can also negotiate post-judgment settlements or installment payment plans.
What Are the Legal Fees for Hiring a Debt Relief Attorney?
Most consumer protection attorneys in New York offer flexible fee structures. The most common arrangements for debt settlement matters include:
- Flat fees based on the number of accounts or the amount of the debt.
- Contingency fees based on the savings achieved through settlement (less common in litigation).
- Hourly fees for litigation defense or post-judgment proceedings.
Is Credit Card Debt Settlement Better Than Filing for Bankruptcy?
While Chapter 7 bankruptcy or Chapter 13 bankruptcy may be appropriate in some cases, especially where total debts far exceed income or there are multiple legal actions, debt settlement can be a more discreet and targeted approach. Settlement allows you to resolve debts without public court filings or long-term credit reporting consequences associated with bankruptcy. An attorney can help evaluate the best option based on your financial profile, assets, and exposure to litigation.
Speak With a Consumer Debt Attorney for Help With Credit Card Debt in NY
If you are facing credit card debt in New York and are considering settlement, do not make decisions based solely on advertisements or assumptions. The laws governing debt collection, litigation, and settlement are complex—and your rights are too important to navigate blindly.
At Law Office of Simon Goldenberg, PLLC, we focus exclusively on consumer debt relief and legal defense. Our credit card debt attorneys have extensive experience negotiating settlements, challenging improper lawsuits, and defending consumer rights under state and federal law. Whether you're facing a lawsuit, a judgment, or collection harassment, we can help you understand your legal options and pursue the most effective strategy for resolution.
Contact Law Office of Simon Goldenberg, PLLC by calling (888) 301-0584 or contacting us online for a free consultation. Learn your rights, explore your options, and take the first step toward financial relief—with a legal advocate who knows how to protect you.