FALCONER, N.Y.–Three credit unions in Western New York havefiled a class-action complaint seeking an expedited hearing as they seek to block a new law from going into effect that lowers the maximum rate of post-judgment interest that can be charged in the state to 2% from the current 9%.
The complaint in the case of Greater Chautauqua FCU, Boulevard FCU, and Greater Niagara FCU v. Hon. Lawrence Marks et al can be viewed here.
The new law is scheduled to go into effect in New York on April 30 and only applies to new judgments, as well as any and all judgments that are not fully paid or satisfied when the law goes into effect, according to Recovery.net.
The change applies to judgments involving consumer debts, which it defines as “any obligation or alleged obligation of any natural person to pay money that arose out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family or household purposes, including but not limited to consumer credit transactions as defined in section 105 of the civil practice law and rules,” Recovery.net explained.
‘Interest Belongs to the Plaintiffs’
“By applying the rate retroactively, the State of New York intends to take the plaintiffs’ property by invalidating interest that belongs to the plaintiffs, they argue in their complaint, which was filed in New York federal court,” Recovery.net reported. “The plaintiffs seek to represent any unsatisfied holder of a New York judgment. “
The report notes that with respect to the three named plaintiffs, the new amendment affects 450 outstanding judgments with a total estimated balance of $3.8 million. The change in interest rate will “reduce the value of judgments statewide by tens of millions of dollars,” the complaint alleges. Along with the reduction, the amendment is “extremely difficult” to comply with by the April 30 deadline, according to the complaint, because of the calculations that have to be performed on unsatisfied judgments, Recovery.net stated.
Guidance Sought
According to the report, the Amendment also provides no guidance on how the new interest calculations should be performed retroactively,” the complaint alleges. “Post-judgment interest is calculated using a declining balance method, meaning that as the principal amount decreases, the interest is recalculated.
In addition, Recovery.net noted the Amendment does not explain how to do this calculation ‘retroactively.’ Should the interest be recalculated solely based on the amount of time that the judgment has been owed? Or should the calculation take into account when payments were made and recalculate the interest as if, when each payment was made, the interest rate was 2%?”
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