New York halts student and medical debt collections
Residents don’t need to make payments for 30 days on these loans in collections.
New York state officials announced Tuesday that it will stop collecting payments on some student loans and medical debt for at least 30 days, effective immediately. The halt automatically applies to medical and student debt that has been referred to the Office of the Attorney General (OAG) for collection. Residents with other types of debt in collections can also apply for a waiver.
The move was part of a larger effort to help individuals cope with the economic impact of the coronavirus outbreak, which has seen small businesses shuttering and employees with reduced hours or completely out of work.
“In this time of crisis, my office will not add undue stress or saddle New Yorkers with unnecessary financial burden,” New York Attorney General Letitia James said in a statement. “New Yorkers need to focus on keeping themselves safe and healthy from the coronavirus, and therefore can rest assured that state medical and student debt referred to my office will not be collected against them for at least 30 days. This is the time when New Yorkers need to rally around each other and pick each other up, which is why I am committed to doing everything in my power to support our state’s residents.”
Student and medical debt automatically suspended
New York state residents who have had medical or student debt sent to the OAG after being sued by their creditors will not be asked to make payments for 30 days. This includes over 165,000 types of debt, including debt for a visit to a state hospital and student loans from attending a State University of New York (SUNY) campus.
The state will also automatically suspend interest and fees on eligible debts, so residents won’t have a higher debt load when payments resume.
The debt collection suspension is currently in effect from March 17th to April 16th. On April 16th, the state will assess whether it needs to extend the suspension.
Applications available for other types of debt
Residents with other types of debt in collections with the OAG can apply to have collections suspended as well. The COVID-19 Application for Suspension of Debt Collection Activity is available on the OAG website. Residents can also call 800-771-7755 if filling out an online form is not an option.
All applicants are required to provide details about their personal and family financial circumstances — and documentation to back it up.
A push to fight the economic impact of the coronavirus
New York state is currently the only state suspending debt collections. But it comes amid a massive effort among state, local and federal officials to curb the economic damage resulting from the COVID-19 outbreak. With small businesses shuttering in response to government policies to prevent the spread of the virus, many individuals are temporarily or permanently out of a job.
The federal government Friday started charging 0% interest on federal student loans. While student loan payments would remain the same, the move makes it more affordable for borrowers to go into forbearance. Under normal circumstances, all interest that adds up during forbearance gets added to the balance of a student loan, making both repayments and the total interest cost more expensive.
States that have been hit the hardest, like Washington, have started issuing a slew of programs to ease the impact on individuals, like expanded unemployment benefits. And several have started offering no-interest business loans to temporarily keep doors open, like Florida and Massachusetts.
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