For the first time since 1981, New York will lower the interest rate on money judgments based on consumer debts from nine percent (9%) per annum to two percent (2%) per annum. Governor Kathy Hochul signed the bill, S5724-A, referred to as the Fair Consumer Judgment Interest Act ("FCJIA"), into law on December 31, 2021.
The FCJIA, which does not go into effect until April 30, 2022, was proposed in an effort to aid low-income New Yorkers and those who have struggled financially due to the COVID-19 pandemic. The law modifies Section 5004 of New York Civil Practice Law and Rules, and applies to all consumer debts, including but not limited to consumer credit transactions.
Consumer debt is generally defined as debts incurred primarily for "personal, family or household purposes."
It is important to note that the reduced interest rate will apply not only to judgments entered on or after the new law's effective date, but will also apply to any portion of a judgment entered before the effective date that is unpaid as of the effective date.
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