New York Court Rules Unpaid Rent Is Consumer Debt Under 2% Interest Law

On August 1, 2025, the City Court of Yonkers ruled that unpaid rent qualifies as consumer debt under New York’s Fair Consumer Judgment Interest Act (FCJIA). This decision is significant as it determines the applicable interest rate for judgments related to unpaid rent.

Key Points of the Ruling

Interest Rate Application

• The court held that the statutory interest rate for judgments related to unpaid rent should be 2%, aligning with the FCJIA.
• This law, effective from April 30, 2022, reduced the interest rate on judgments for consumer debt from 9% to 2%.

Definition of Consumer Debt

• Consumer debt is defined as any obligation to pay money arising from transactions primarily for personal, family, or household purposes.
• The court found that unpaid rent fits this definition, thus making it subject to the lower interest rate.

Implications of the Ruling

• This ruling allows tenants who owe unpaid rent to benefit from the reduced interest rate, potentially lowering their financial burden.
• It also sets a precedent for future cases involving unpaid rent and consumer debt classifications in New York.

This decision reflects ongoing changes in consumer credit laws and their impact on landlord-tenant relationships in New York.