collective action

Creditors Are Still Calling in People’s Debts. Advocates Beg Cuomo: Stop Them

Health attendant Migdalia Figueroa has had 10% of her wages garnished since January.
Health attendant Migdalia Figueroa has had 10% of her wages garnished since January. Photo: Rachel Holliday Smith/THE CITY

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Gov. Andrew Cuomo has paused the collection of medical and student debt owed to New York State, ordered evictions halted and put a 90-day stay on mortgage payments and foreclosures for owners facing financial hardship.

But one key function of the legal system is chugging along unabated amid the coronavirus crisis: the collection of private debts through New York’s courts.

This week, as the governor ordered most court operations to stop, creditors of all kinds kept filing actions against people and businesses, court records show.

In New York County alone, the docket between Monday and Friday shows dozens of debt cases.

Among them: a debt buyer seeking a $35,826.73 judgment against a Manhattan man, a bank going after a $110,000 loan to a Little Italy pharmacy and a request to enforce a confession of judgment on a $96,247.56 cash advance to a Bronx medical case management group.

‘Unacceptable Health Risk’

Sarah Ludwig, co-director of the New Economy Project, said her group has been flooded with calls to its legal hotline from New Yorkers getting hit with cases even as the city all but shuts down.

“Clearly, this is not the moment to be depriving people of their funds and subjecting them to a situation where their bank accounts are frozen,” she said.

Some of those she’s heard from “can’t get at their money to pay for food and medicine and all of the things we [all] desperately need to protect ourselves.”

The issue led her group to sign a letter with more than 60 other organizations — from racial and economic justice outfits to labor organizations to community activists — asking Cuomo and Chief Judge Janet DiFiore for an emergency moratorium on all debt collection in the state.

That would include an end to enforcement of judgments, a pause on all garnishments and levies, and stopping attorneys from serving debt collection orders.

Seventeen state senators, led by Long Island Democrat Kevin Thomas, signed their own letter pushing for the moratorium.

“No New Yorker should face the unacceptable health risk of going to the courthouse to defend against a debt collection lawsuit, or find herself without access to her funds, unable to buy food, medicine or other necessities, because of a debt collection judgement,” the March 20 letter read.

In response, Cuomo spokesperson Jack Sterne said in a statement that the governor is “effectively pressing pause on court-related deadlines” through an executive order signed into law Friday. The directive suspended, or “tolled,” any specific time limit for the “commencement, filing, or service of any legal action, notice, motion, or other process or proceeding,” the order read.

Sterne also said, “It makes sense to also suspend all filings.” He stopped short, however, of saying definitively whether the governor would direct the courts to do so.

Susan Shin, legal director for the New Economy Project, pushed back on the governor, questioning how Cuomo would address enforcement of debt collection already underway.

“We appreciate the governor’s commitment to addressing these issues,” she said. “But the actions taken so far unfortunately address neither the profound health risks, nor the financial security and racial and economic justice issues that ongoing debt collection poses to New Yorkers.”

‘This is My Money’

Home health attendant Migdalia Figueroa found herself considering a trip to court this past week to defend herself against Midland Funding, a debt collection agency that has been garnishing 10% of her wages since early January.

The move stemmed from an alleged debt she owed from 2007, court documents show. But Figueroa said she never received a notice about it — and only found out about the court action when her company started docking her paychecks.

“I had to call payroll, like ‘What is this? What’s going on?’” she said. In total, Midland claims she owes just over $2,000, she said.

She and those at New Economy Project who are assisting her cannot get more information about the 2007 debt because the documents are not digitized, Ludwig said. Obtaining the paperwork could take weeks or months.

Tracy Ting, senior vice president for Encore Capital Group, the parent company for Midland Funding, said the group is “committed to working closely with our consumers during these challenging and unprecedented times” and noted that the company’s Consumer Bill of Rights has “clear hardship provisions.”

“We often dismiss or otherwise stop collection efforts when we learn of a consumer’s individual hardship,” she said.

Figueroa had a court date on March 18 to argue her case against the company, but the hearing was adjourned until June, court records show. In the meantime, her wages continue to disappear from every paycheck — even as her hours with elderly and medically frail clients have been cut dramatically.

“Right now I’m working minimum hours because of the quarantine,” she told THE CITY. “This week, I did only 12 hours.”

Figueroa is formerly homeless and got out of the shelter system through the affordable housing lottery. She moved to a subsidized apartment in a new building in Fort Greene two years ago and pays $919 a month for rent.

Despite the dangers of being around people, she said she was ready to go to court to fight.

“I don’t care about this coronavirus. This is my money,” Figueroa said. “I don’t need an eviction notice. I don’t need that. It took me a long time to get here. I don’t want to be in the shelter again.”

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