New York Medical Debt Collection Laws: What Changed in 2024

New York consumers with unpaid medical debt won a major victory. Governor Kathy Hochul signed a bill banning creditors from reporting medical debt to credit bureaus.

The S4907A bill prohibits healthcare providers, hospitals, and ambulance services from sending negative reports about your medical bills. Before this law, many New Yorkers had damaged credit scores due to medical debt they never chose to incur.

Your credit score is now protected from medical debt. But creditors still want their money. Without the threat of credit reporting, they may turn to lawsuits more frequently.

If you get sued for medical debt in New York, our partner Solo can help you respond with a convincing Answer document.

What Changed in New York’s Medical Debt Laws

New York took bold action to protect residents from unfair medical debt penalties. The state now leads the nation in consumer protection for medical bills.

Here are the specific changes you need to know:

• October 20, 2024: Hospitals must now offer improved financial assistance programs. The 2024-2025 health budget legislation requires them to accept financial assistance applications at any point during collection. Hospitals cannot sell your medical debt to third-party collectors. They cannot sue you if your income is below 400% of the federal poverty level.
• December 13, 2023: Senate Bill S4907 banned medical debt from credit reports immediately. Credit bureaus stopped using medical debt in credit score calculations the same day Governor Hochul signed it.
• November 23, 2022: Senate Bill S6522A/A7363A prohibited wage garnishment and primary residence liens for medical debt. Your paycheck and home are now protected from medical creditors.

Federal and State Laws That Protect You

New York uses multiple layers of protection against unfair debt collection. Both federal and state laws work together to safeguard your rights.

You have protection at every stage of the collection process:

• Fair Debt Collection Practices Act (FDCPA): Federal law controls when and how third-party collectors can pursue medical bills. Collectors must follow strict rules about contact times, harassment, and threats.
• Fair Credit Reporting Act (FCRA): Federal law governs how creditors report debt. You can dispute inaccurate medical debt entries. If a creditor reports your medical debt now, they violate this law.
• Consumer Credit Fairness Act: New York state law from April 2022 ensures fair treatment during all debt collection interactions. Creditors must follow specific procedures when contacting you about debt.

If a medical creditor violates these laws, you have options. Submit a complaint to the Consumer Financial Protection Bureau. Report them to the Federal Trade Commission and your state attorney general.

How Collectors Will Pursue Medical Debt Now

Medical debt hasn’t disappeared. Creditors still want payment. They just lost their most powerful collection tool.

Without credit reporting threats, collectors have fewer options. But the option they have left can seriously harm your finances.

Debt collectors may file lawsuits more frequently now. A lawsuit gives them access to legal collection methods. They can freeze your bank account. They can place liens on vehicles or other property. They can sell non-exempt assets.

New York law protects your wages and primary home. But other assets remain vulnerable. A judgment against you creates years of financial complications.

You must respond if you receive a debt collection lawsuit. An Answer document is your first line of defense. You can deny false claims the creditor makes. You can raise defenses that reduce or eliminate the debt.

Our partner Solo helps you create a proper Answer and respond to the court before your deadline. Most people who respond to lawsuits get better outcomes than those who ignore them.

Settlement Options for New York Medical Debt

New laws protect your credit score. But the debt still exists. Creditors can still contact you and pursue legal action.

Settlement offers you a path forward. You negotiate to pay less than you owe. Creditors often accept reduced amounts to close accounts.

Settlement works best before a lawsuit starts. Once you have a judgment, your negotiating power decreases. Creditors know they can collect through legal methods.

Professional help improves your settlement outcomes. Our partner Solo facilitates negotiations with creditors. The process is simple and happens online.

You make an offer based on what you can afford. The creditor reviews and responds. You negotiate back and forth until you reach agreement. Once settled, you pay the agreed amount and the debt closes.

Document everything during settlement. Get written confirmation before making payments. Keep records of all communications and transactions.

Spouse Responsibility for Medical Debt

You may be responsible for your spouse’s medical debt in New York. Responsibility depends on specific circumstances.

If you signed paperwork accepting responsibility, you’re liable. Many healthcare providers ask spouses to sign guarantor forms. These forms make you a co-debtor.

New York follows the doctrine of necessities. Marriage creates legal obligations to provide necessities of life. Medical care qualifies as a necessity.

Courts may hold you responsible for your spouse’s necessary medical care. Even without signing documents, you could face collection efforts.

Community property doesn’t apply in New York. But the doctrine of necessities creates similar results for medical debt.

Credit Score Protection

Your credit score is now safe from medical debt in New York. Credit bureaus cannot include medical debt in calculations.

Medical debt that appeared on your credit report before December 2023 should disappear. Credit bureaus must remove it from your file.

Check your credit report to verify removal. You can get free reports from all three bureaus at AnnualCreditReport.com.

If medical debt still appears, dispute it immediately. The debt violates current New York law. Credit bureaus must delete it within 30 days.

Your credit score may improve after medical debt removal. Payment history and credit utilization become more important factors.

Protection only applies to medical debt. Other debts still affect your credit score normally.