How to Navigate New York's Legal Landscape

This Guide provides an overview of some of the key legal areas in New York state laws and relevant federal regulations on debt management and bankruptcy, business formation and estate planning.

Debt Management Options

New Yorkers looking to solve financial problems have mainly two choices: debt consolidation and debt settlement.

• Consolidation of debts involves combining multiple loans into a single loan or payment scheme, which consequently results in lower interest rates or lower monthly payments. Services of debt consolidation in New York are secured by the General Business Law to protect against certain unfair practices.
• Debt settlement involves negotiating a settlement with the creditor for less than the amount owed. New York requires the licensure of settlement companies to operate within the Debt Settlement Practices Act. This statute provides consumer protection from high fees and fraud.

When considering either option, it's crucial to research service providers thoroughly. Verify their licenses and review customer feedback to ensure they comply with New York's consumer protection laws.

Statute of Limitations on Debt

New York statute establishes a specific time limit, called a statute of limitation, on the collection of all types of debt. These are the time frames that must be known both by a creditor and by a debtor:

• Written Contract: A contract in writing has a six-year statute of limitations. It starts to run from the date of breach or from the date when the last payment was made, whichever of these dates first happened, under New York Civil Practice Law and Rules (CPLR) § 213.
• Credit Card Debt: Credit card debt generally falls under the six-year statute applicable to written contracts. It could be varied if the creditor is outside of New York state.
• Judgments: Judgments are collectible in New York State for a period of 20 years. Foreign state judgments must be domesticated within New York to have any validity.

New York Collection Debt Laws New York has implemented strict consumer protection measures regarding debt collection:

The New York State Department of Financial Services enforces debt collection practices on behalf of consumer rights. This is a regulating authority; it works toward the cause of keeping the financial sector operating with justice.

EIPA is a state law that exempts specific incomes from garnishment. These may include Social Security benefits, unemployment compensations, and other related benefits provided for the financial protection of particularly vulnerable individuals. In New York, the federal level applies with regard to the Fair Debt Collection Practices Act. The law protects against abusive debt-collection tactics and enables remedies for consumers subjected to unfair practices.

Bankruptcy in New York

Bankruptcy is a legal procedure that can help New York residents resolve burdensome debt. The U.S. Bankruptcy Courts for New York State encompass four districts: Southern, Eastern, Northern and Western. New York has a few bankruptcy options but the majority of people file under one of the following:

• Chapter 7 Bankruptcy: Known as liquidation bankruptcy, this option involves selling non-exempt assets to repay creditors. Both individuals and businesses in New York can file for Chapter 7.
• Chapter 13 Bankruptcy: Also known as reorganization, this form of bankruptcy is typically designed for individuals who maintain a regular income. It enables the debtor to reorganize his debts in a 3-5-year period of time while maintaining property.
• Chapter 11 Bankruptcy: Although Chapter 11 bankruptcy is primarily utilized by businesses to reorganize debt and continue business operations, individuals with high amounts of debt and assets can also use it.

New York-Specific Considerations

New York law offers the following in bankruptcy proceedings:

Exemptions: New York has created its list of bankruptcy exemptions. Perhaps the most well-known is the homestead exemption; in 2024, it would protect up to $179,975 in equity of a primary residence in most counties.

Means Test: Filers of Chapter 7 bankruptcy in New York will have to pass a means test in which their income will be compared to the state-median levels.

New York Business Incorporation

Incorporation of a business in New York is done through a multi-step process and by fulfilling additional state requirements. These are summarized below:

Company Incorporation Process

1. Business Name: The name chosen must be distinctive from all other business names already filed with the New York State Department of State.
2. Registered Agent: Designate a registered agent located in New York to receive legal documents on behalf of your company.
3. Articles of Incorporation/Organization: File this important document with the New York Department of State. It should contain basic information like the name of the company, the purpose, and for corporations, the amount of shares to be issued.
4. Publication Requirement: The LLCs are burdened with the publication requirement of the notice of formation in two newspapers for six successive weeks.
5. Internal Documents: Prepare a draft of corporate bylaws or an LLC operating agreement that establishes your company's internal governance.
6. Annual Reporting: New York statute requires businesses to file a biennial report with the Department of State to maintain good standing.

Business Licensing

Although there is no general statewide business license that New York requires, there are certain licenses or permits that could be required depending on your business and location:

• Professional Licenses: Certain professions, including law, medicine, and real estate, require state-issued licenses to operate legally.
• Local Licenses: Many local municipalities, especially New York City, also require licenses for many types of business activities, such as food service or retail operations.

New York Wills and Estate Planning

Estate planning in New York involves several legal instruments devised to handle one's assets when the person is already deceased. The state law primarily covers the Estates, Powers, and Trusts Law, or EPTL.

Wills in New York

To be a valid will in New York, each of the following must apply:

1. It shall be in writing.
2. The testator (person making the will) must sign it
3. At least two witnesses must attest to the signing

New York does not recognize holographic wills, with limited exceptions for members of the armed services.

Trusts - New York

Trusts offer a flexible method for managing and distributing assets. A living trust allows the grantor to manage assets during their lifetime and specify distribution after death, often avoiding probate.

Revocable Trusts can be amended or revoked by the grantor at any time during his life. Although assets held by such trusts avoid probate, they are still liable to estate taxes.

When created, irrevocable trusts cannot normally be changed. However, they offer more asset protection and tax benefits.

Probate Process in New York

Probate is the court-supervised process of administering a deceased person's estate. For individuals who die with a will, the Surrogate's Court in New York oversees this process. Key steps include:

Filing of the Will: The will and a petition for probate are filed with the Surrogate's Court in the county where the decedent was a resident. Notifying Heirs and Creditors: The executor must inform interested parties and creditors of the decedent's passing.

Distribution of Assets: The executor distributes the remaining assets after paying all the debts and taxes, according to the testamentary disposition.

Additional Legal Resources in New York

• New York State Bar Association (NYSBA):
• New York Unified Court System:
• New York Department of Financial Services (DFS):

Conclusion

New York has vast legal platforms for debt management and bankruptcy as well as the incorporation of businesses and estate planning. These laws, in turn, provide clear guidelines on ways to manage financial and legal matters regarding consumers, businesses and individuals. Since the law is different for each individual and their circumstances and it constantly changes, any person seeking specific legal advice should consult a qualified New York attorney.