On December 31, 2021, New York Governor Hochul signed into law S5724-A which reduces the annual rate of interest on judgments arising out of a consumer debt where the defendant is a natural person from 9% to 2%.  The laws take effect 120 days from the Governor’s signature, which is April 30, 2022.

For purposes of the rate limitation, the new law defines “consumer debt” as “any obligation or alleged obligation of any natural person to pay money arising 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, whether or not such obligation has been reduced to judgment, including, but not limited to, a consumer credit transaction, as defined in subdivision (f) of section one hundred five of this chapter.”

The definition of “consumer credit transaction” in Section 105(f) is “a transaction wherein credit is extended to an individual and the money, property, or service which is the subject of the transaction is primarily for personal, family or household purposes.”

Most notably, the reduced rate will apply not only to judgments entered on or after the new law’s effective date but will also apply to any portion of a judgment entered before the effective date that is unpaid as of the effective date.


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