A debt buyer will vacate nearly $1.7 million from 300 judgments it allegedly improperly obtained in New York courts as part of a settlement reached with Attorney General Eric Schneiderman on Wednesday.

Asta Funding sued consumers in New York and obtained default judgment uncontested against those consumers when they failed to respond to the lawsuits. Many of the claims filed by Asta Funding allegedly weren't filed in a timely manner under state law.

“Filing lawsuits on debts that have surpassed the statute of limitations is an abuse of the court system and hurts New Yorkers,” Schneiderman said. “My office will continue to hold debt collectors and lenders accountable, so that New Yorkers can keep more of their hard-earned money where it belongs – in their pockets.”

In addition to vacating the judgments, Asta also agreed to pay approximately $100,000 in civil penalties and court costs, and also will reform its policies for collecting debt.

The company mainly purchases unpaid debt from consumer credit cards and other debts from the original creditor at discounted prices. Asta then attempts to collect the debt from the consumers.

Under state law, the statute of limitations to collect debt is six years unless the creditor is located in a state with a shorter statute of limitations.

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