New York Governor Kathy Hochul signed a new law on Wednesday, December 15, which will remove most medical debt from the credit reports of New York residents. The law will substantially improve many people’s credit scores by removing the impact of medical debt on their credit, enabling a better financial future. In particular, this will be a boon for many low-income New Yorkers who struggle to improve their circumstances after a major medical emergency.
What is This New Law?
The new law, which is the second of its kind in the United States, will protect New York residents from having medical debt affect their credit scores. This means that people who are currently suffering from the costs of major medical expenses, from serious accidents or illnesses, will not see it impact their credit. This, in turn, could increase their ability to qualify for loans, credit cards, apartments, or even employment.
How Does the New Law Work?
The new law will prohibit credit reporting agencies from collecting or reporting information related to the medical debt of New Yorkers. It also prohibits hospitals, doctors, and other healthcare providers from reporting that debt to credit reporting agencies. However, this does not affect medical debt that has been charged to a credit card (making it count as credit card debt), nor will it affect debt from out-of-state providers.
Why Was This Law Passed?
The reason this law was passed is because of the impact that medical debt has on many people’s lives. Through no fault of their own, people are forced to shoulder potentially massive debts they cannot reasonably hope to pay, which in turn limits their opportunities to improve their financial situation. This can create a “vicious cycle,” as Governor Hochul put it, where a person spirals further into debt and loss because their debt prevents them from getting the opportunities they need to escape their predicament.
What Impact Will This Have?
For many New Yorkers, particularly low-income residents, this could be a major financial boon. Having bad credit can negatively impact just about every part of a person’s financial life, from their ability to qualify for credit or loans, to their ability to obtain an apartment, to even their ability to find or maintain employment. Without this medical debt weighing them down, it can make it much easier for them to take the steps needed to get out of debt.
With offices located in Jamaica Estates and Brooklyn, New York, the law firm of Hobson-Williams, P.C. is composed of a highly knowledgeable and diligent staff. With over 25 years of experience, the firm’s skilled attorneys are dedicated to protecting and serving tier clients’ needs and legal interests, and are committed to providing unparalleled client service. Practice areas include elder law and estate planning, guardianships, debt collection, Medicaid, real estate, landlord/tenant and business law. For more information, call 1-866-825-1529 or visit their contact page.
