Unpaid medical debt will no longer appear in New York residents’ credit reports under a bill signed into law by Gov. Kathy Hochul on Wednesday.
The law prohibits credit agencies from collecting information about or reporting medical debt. The law also bans hospitals and health care providers in the state from reporting such debt to the agencies.
New York is the second state after Colorado to enact such a law. A similar nationwide measure is being considered by the federal Consumer Financial Protection Bureau.
“Medical debt is such a vicious cycle. It truly hits low-income earners, but it forces them to stay low-income earners because they can’t never get out from under it,” Hochul, a Democrat, said at the bill- signing ceremony in New York City.
How does this work in practice? What happens if you just don’t pay medical debt?
They can still collect on the debt by garnishing your wages. The problem is that if you don’t have access to credit because of your bad score then you have to rely on predatory lenders such as buy-here-pay-here car lots. You will also have problems trying to rent an apartment or buying a house.