For understandable reasons, many consumer and business debtors that come to us with collection issues are focused overwhelmingly on the monetary terms of any potential settlement with the creditor or debt collector. Particularly for those pressed for cash, there are hard-to-ignore bottom line issues such as: Will they have to pay? How much? Lump sum or over time?
Without detracting from the obvious importance of these questions, it is important to note that the non-money terms can often be critical and failure to adequately address non-money terms can leave the debtor at a severe disadvantage.
Here are just a few examples:
Example #1: Where a judgment has been taken against the client, the creditor typically does not care whether payment results in vacatur and dismissal vs. satisfaction of judgment. But the difference can be hugely important to the consumer in terms of credit reporting. Vacatur and dismissal cleans up the person’s credit, removing the judgment from the public record that is reflected in the credit report. Satisfaction of judgment, in contrast, memorializes the lawsuit as one in which the consumer was sued for non-payment, lost the suit and then paid the judgment. There is typically no reason not to condition settlement with the creditor on the parties entering into a stipulation of vacatur and dismissal.
Example #2: Where appropriate, does the settlement agreement characterize the debt as disputed and/or specifically address the fact that this is not a case of “forgiveness of debt”? Creditors are big on boilerplate and that boilerplate is rarely if ever favorable to the consumer. Where the debt is legitimately disputed, there is no reason (in fact, every reason not to) agree to boilerplate language that has the defendant acknowledging indebtedness and/or that characterizes a reduction or elimination of the purported balance as “forgiveness of debt”. By leaving this language in, the defendant/alleged debtor is virtually assuring that he or she will be issued a 1099-MISC characterizing the reduction in principle as income on which taxes are to be paid while simultaneously limiting his or her ability to effectively challenge that characterization. It is an avoidable and common mistake. (The appropriate alternative language will, of course, depend on the facts of the case.)
Example #3: Does the settlement provide for a reasonable “right to cure” procedure? It seems basic, but many standard creditor agreements contain no or only very limited right to cure language. The result is that the debtor can find themselves arguably in breach and owing the full amount originally sought based upon a purported one-day delay in payment. One common trap is to provide for a very short cure window plus notification by USPS regular mail. By the time the notice arrives, the window to fix any alleged deficiency may have closed! Our practice is to insist on at least 7 days, with notice by multiple, fast communication channels (e.g. fax plus email) and notice to both the debtor and his or her attorney. That way, we and our clients have a meaningfully window to address any purported delay in payment without adverse consequence.
I could keep going (and don’t even get me started with regard to overly broad confidentiality provisions), but you get the idea: to paraphrase the old Smokey The Bear public service announcements: Only You Can Stop Anti-Debtor Boilerplate.
The new year brings a higher minimum wage rate for New York State workers, as the minimum wage increased for workers statewide on December 31, 2016. One big change is that the generally-applicable minimum wage rate now varies depending upon an employer’s size and an employee’s work location. In addition, the higher minimum wage rate for workers at fast food chains with 30 or more locations (which could include locations outside of New York State) increased again on December 31st.
The new rates are as follows:
- Fast food workers in New York City: $12 per hour
- Fast food workers in other parts of the state: $10.50
- Employees of New York City large employers (11 or more employees): $11 per hour
- Employees of New York City small employers (10 or fewer employees): $10.50 per hour
- Employees in Westchester & on Long Island: $10 per hour
- Employees in the rest of New York State (“upstate”): $9.70 per hour
A few things to note:
- For determining the size of a New York City employer, employees both inside and outside of New York City (during the prior or current calendar year) are counted. But the New York City wage rate only applies to employees working in New York City.
- All of the wage rates above depend on where an employee works, not where an employer is located.
- If an employee works in multiple regions (say, New York City and Rockland County), an employer will comply with the law by either paying the higher rate for all work (in this example, New York City), or by paying the applicable minimum wage rate for each region for all work done in that region (for example, New York City rate for all hours worked in New York City, and the upstate rate for work done upstate).
Have questions about the new minimum wage law? Give us a call at (212) 500-6114, or email Tricia Kakalec at email@example.com.