Press Release
CSS Applauds Passage of the Fair Consumer Judgment Interest Act in the State Legislature
The Community Service Society (CSS) applauds the New York State Assembly and Senate for passing legislation that will protect New Yorkers from excessive interest rate on money judgments arising out of consumer debt, including medical and student debt, by capping judgment interest rates to two percent.
New Yorkers struggle with health care costs, even when they have insurance. More than 52,000 New York patients have been sued for medical debt by non-profit hospitals in the past five years—over 5,000 during the COVID-19 pandemic according to a CSS report released in January 2021. Under section 5004 of the New York Civil Laws and Practice Rules, these hospitals are permitted to charge an exorbitant commercial nine percent interest rate, even though they are non-profit charities and collectively receive $1.1 billion to help offset their losses for providing uncompensated care to low-income uninsured patients.
This bill also protects other consumers, including those with educational debt, which has become a racial equity issue in New York and across the country. The problem of student debt is especially acute among low-income borrowers, first-generation college students, women, and communities of color. Black and Latinx student loan borrowers, for example, are twice as likely to have their student debt in collections as compared to their peers.
The current allowable interest rate on medical, student and other consumer debt judgments puts New Yorkers at greater risk of financial instability that can lead to other problems, such as inability to maintain housing and food insecurity. Moreover, medical debt is a racial justice issue: in many parts of New York, people of color are more than twice as likely to have past-due medical debt hurting their credit.
The Fair Consumer Judgment Interest Act (S5724A/A6474A), sponsored by Assembly Member Helene Weinstein (District 41–Brooklyn) and State Senator Kevin Thomas (District 6-Nassau County), would ensure that a reasonable two percent interest rate would be imposed in consumer debt collection cases instead of the allowable nine percent. CSS supports the legislation and urges Governor Cuomo to sign it into law.