We talked earlier this year about the Biden administration’s plan to remove medical debt from Americans’ credit reports. As we noted, the Consumer Financial Protection Board (CFPB) has been working on a new rule that would implement that change.
Currently, the CFPB says the new rule is scheduled to take effect next year. With the new administration coming in, however, there’s no way to predict whether that will happen. In the meantime, there are two pieces of good news for New Jersey residents.
The state is paying off millions in medical debt
Gov. Phil Murphy announced that the state is using leftover federal government aid to pay some $220 million in medical debt for more than 127,000 of the state’s residents. The people who are benefiting from this move are being notified. There’s no application needed. It’s based on income level.
A new law adds protections for those with medical debt
This year, the governor also signed a new law that provides help with medical debt and prevents illegal practices by medical debt collectors. The governor called the new law a “monumental step toward building a health care system that is more affordable and more accessible for families all across New Jersey.”
Some of the things the new law, which took effect this summer, does include the following:
- Prohibits creditors and collectors from reporting medical debt to credit reporting agencies
- Limits interest on medical debt to a maximum of 3%
- Prohibits wage garnishment for medical debt for anyone whose annual income is under 600% of the federal poverty level
Those who violate the law can incur financial penalties. Further, the law states that any debt reported to a credit reporting agency in violation of the law will be considered void.
If you’re burdened by significant medical debt, it’s important to make sure that you’re benefiting from these steps taken by state lawmakers. If your debt remains insurmountable, it’s wise to look at all of your possible options for dealing with it. Getting experienced legal guidance can be worthwhile.
