It’s a threat no tenant wants to hear from their landlord: “Pay up now, or I’m sending you to collections.” With most landlords checking credit scores as part of the rental application process, the specter of a bad rating is enough to send any New York City tenant into panic mode.
But until the pandemic, this threat was one tenants only heard after being evicted. Now, with a robust eviction moratorium in place without the cancellation of rent — it has halted evictions for nonpayment, but the tenant still owes the money — some landlords are hiring collections agencies to intimidate current tenants with rent arrears.
“It’s a new animal,” said Andrew Scherer, a professor at New York Law School and the author of Residential Tenant-Landlord Law in New York. “Prior to the pandemic, there wouldn’t be any reason for a landlord to try to collect while the tenant is still residing in the apartment.”
In the past, Housing Court was the route for landlords seeking unpaid rent. If a tenant lost a nonpayment case and could not pay outright, landlords could enlist a collections agency to garnish their wages and attach their bank accounts. With eviction proceedings paused until February 28, and until May 1 for tenants who fill out a hardship declaration, that route is now closed.
So, landlords are instead exploiting tenants’ fears of a damaged credit score — and their lack of knowledge
about how collections work. Rent arrears aren’t like medical debt, in which a hospital can refer an unpaid balance
directly to an agency. According to Scherer, pursuing a collections action outside Housing Court would require landlords to sue instead in small-claims or civil court. It would also add complications to an eviction case, should the landlord pursue one once the moratorium lifts.
“It’s really hard to know what a landlord means by the phrase ‘send to collections,” he said. “It’s an unusual time, but I think it’s most likely an attempt to intimidate people, an empty threat.”
The popularity of this tactic with landlords is not yet clear. Met Council does not collect specific data on collections actions, and anecdotally, the tenants’ rights hotline has not seen a significant increase in such calls over the last year. Hotline coordinator Kate Ehrenberg said that there have only
been three since the pandemic started — two where an individual caller wasn’t able to pay rent, and one where
a tenants’ association withheld rent for reduction of services.
The latter caller, who spoke to Tenant/Inquilino on condition of anonymity, described the experience of receiving a collections threat as a “shakedown.”
“Credit agencies are not supposed to ding you unless you have a judgment against you,” she said, “but are we really going to trust Equifax to check to see whether there was a judgment?”
On the advice of the consumer-finance advocacy group New Economy Project, her tenants’ association drafted a letter disputing the debt, which they planned to send to both
the landlord and, if necessary, any collections agency sent after the tenants. Although the issue was resolved
before an agency came knocking, she advises other tenants in her situation to prepare to write something similar.
Scherer said that tenants threatened with collections should also lawyer up if a landlord attempts to sue them. Doing so will not only help with their own cases — it could also create a legal precedent that would prevent landlords from continuing the practice.
“There are many things you can get away with in the law until a lawyer raises an issue,” he said, “and I believe there are solid legal arguments a tenant could use to block the col-