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New York Changes Medical Debt Collection Laws

Dena Standley | May 31, 2024

Dena Standley
Legal Expert, Paralegal
Dena Standley, BA

Dena Standley is a seasoned paralegal with more than 20 years of experience in legal research and writing, having received a certification as a Legal Assistant/Paralegal from Southern Technical College.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: New York no longer includes medical debt on your credit report. While this is good news, you are more likely to be sued by a debt collector now that they have fewer options. SoloSuit can help you send a convincing Answer that will likely help you win your debt collection case.

New York consumers with unpaid medical debt recently received terrific news when Governor Kathy Hochul signed a bill stating that creditors should not report medical debt to credit reporting agencies. The S4907A bill that was signed into law prohibits healthcare providers, hospitals, and ambulance services from sending a negative report concerning medical bills a consumer accrued.

Before the bill was passed, many New Yorkers had below-average credit scores due to medical debt impacts that were not a choice but the result of an injury or illness. This news has changed the trajectory for consumers seeking to rebuild their credit and offer hope for better financial opportunities. Let's explore New York’s medical debt laws further and how creditors will pursue their debt.

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Specific changes to the medical debt collection laws

New York is among the few states that have taken drastic action in the recent past to protect their residents from suffering financially due to unplanned medical debts. These new laws have saved countless consumers from experiencing unfair medical debt penalties similar to other debts. These recent changes include the following:

  • Effective October 20, 2024, hospitals in New York will make state-mandated changes to their financial assistance program. This requirement, passed as part of the State’s health and mental hygiene budget legislation for 2024–2025, covers the eligibility criteria and debt collection practices.

    For instance, healthcare practitioners and facilities must permit patients to apply for financial assistance at any point in the collection process. It also prohibits the sale of medical debt to third-party debt collectors and prevents providers from starting legal action against patients if their income is below 400% of the federal poverty level.

  • On December 13, 2023, Governor Kathy Hochul signed into law Senate Bill S4907, which prohibits healthcare practitioners and institutions from sending medical debt to credit reporting agencies. This law took effect immediately after the governor signed it, and credit bureaus stopped using medical debt as a factor when calculating credit scores.

  • Governor Hochul signed Senate Bill S6522A/A7363A on November 23, 2022, preventing healthcare and medical providers from garnishing wages or placing liens on a consumer's primary residence due to a medical debt owed.

Other medical debt collection laws in New York

New York uses federal and state laws to protect consumers from unfair and deceptive medical debt collection practices. The various New York debt collection laws cover every stage of the debt collection process and ensure consumer’s interests are at the forefront. The following are examples of these laws:

  • The Fair Debt Collection Practices Act is the main federal law that monitors all debt collectors. It outlines when and how third-party debt collectors follow after their money, including unpaid medical bills.
  • The Fair Credit Reporting Act is another crucial federal law that monitors how creditors report outstanding debt. These laws ensure the debt collector reports the correct debt and removes an inaccurate debt entry. For instance, if you see an unpaid medical debt on your credit report, you can report the creditor for violating a section of this law.
  • The Consumer Credit Fairness Act, specific to New York state, took effect in April 2022. These laws safeguard your interests and ensure fair treatment from creditors and third-party debt collectors when interacting with consumers about their debt.

If you have a medical debt and the creditor violates any of these laws, submit a complaint to the Consumer Financial Protection Bureau and report them to the Fair Trade Commission and your attorney general's office.

How will debt collectors pursue their money?

Americans often find themselves facing a medical debt crisis. With the price of healthcare continuing to climb, New York residents may faced increased collection efforts of unpaid medical bills.

Since debt collectors cannot use the threat of adding your medical debt to your credit report, they have limited options for forcing you to pay. However, the option they have that can cause the greatest impact on your financial life would be a debt collection lawsuit. Even though the law protects you from wage garnishment and lien on your primary residence, the effects can harm your financial situation. They can still try to access your bank account, put a lien on your car or other properties, or sell some of your assets.

If you receive a debt collection lawsuit for medical debt, respond with an Answer to increase your chances of winning. The Answer document allows you to deny some claims the creditor makes against you. It also allows you to explain why you are not responsible for the debt or why you shouldn't pay. Learn how to draft an Answer in the following video.

Settle your medical debt in New York

As a New York resident, you are fortunate to have laws that protect your finances against medical debt. However, the debt remains, and creditors can continue to give you sleepless nights. The best way to deal with this debt is to make a settlement offer and clear the debt for less than you owe. SoloSettle is an online tool that can facilitate the negotiation process.

Check out our guide on how to Settle Debt in New York to learn more.

FAQs on New York medical debt collection laws

Let’s take a look at some frequently asked questions about NY medical debt collection and the state laws governing this practice there.

Am I responsible for my spouse's medical debt in New York State?

It depends on whether you signed a document stating that you accept the responsibility for unpaid medical bills if your spouse defaults. In addition, New York adheres to the doctrine of necessities, saying that marriage legally holds you accountable for providing your spouse with the necessities of life, including medical care. In this situation, you may be held responsible.

Does New York medical debt affect my credit score?

No, since medical debt is no longer reported on your credit report, credit bureaus cannot use it to calculate your credit score.

When did the recent New York medical debt law go into effect?

The recent medical debt law took effect immediately. Governor Kathy Hochul signed it on December 23, 2023.

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