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State will ban collection of medical debt and remove it from credit reports

  • / Updated:
  • Staff Report 

New York is set to enact legislation prohibiting credit reporting agencies from collecting medical debt or incorporating it into a consumer’s credit report.

Finger Lakes Partners (Billboard)

The measure, which received final approval in the state Assembly on Tuesday, is designed to address the financial strain faced by millions of individuals carrying medical debt, which affects their ability to secure loans or make substantial purchases.

National credit reporting agencies currently do not report medical debts under $500, however, many people often face bills exceeding this amount.

The legislation’s introduction follows a survey from the Community Services Society of New York which found that 41% of New Yorkers have either contested a medical bill or paid one they didn’t believe they owed out of fear of being sued or placed into collections. The survey also indicated that 38% avoided receiving care or sacrificed necessities due to healthcare costs.