Legislation Signed into Law Will Lower Statutory Judgment Interest Rates, Ease the Debt Burden on New York Consumers
Assemblymember Helene E. Weinstein today announced that legislation signed into law by Governor Hochul will ease the financial burden on New Yorkers with consumer debt judgments against them, especially low-income New Yorkers and those impacted financially by the COVID-19 pandemic (A.6474-A, Weinstein).
“The statutory judgment interest rate for consumer debt has not been adjusted in more than 40 years,” Assemblymember Weinstein said. “This law will have a real-life impact on the lives of so many – so they don’t have to choose between putting food on the table and paying off consumer debt. Simply stated, a nine percent interest rate on consumer debt has had a crushing impact on lower- and middle-income New Yorkers, as debt collectors seek and enforce judgments for rent and mortgage arrears, medical debt, overdue credit card and utility bills, and student loans. If this change were not made, our nine percent interest rate would continue to wreak havoc on New York’s lower- and middle-income communities.”
The existing nine percent interest rate has contributed to a growing number of unpaid judgment amounts and resulted in default judgments against consumers throughout the 2000s. The need for this change has also been exacerbated by the COVID-19 pandemic, which caused record unemployment, making it difficult for consumers to pay their bills, as well as to pay consumer debt judgments.
This new law will apply an interest rate of two percent per annum prospectively to consumer debt judgments and will also apply retrospectively to consumer debt judgments that are not yet fully paid as of the effective date.
The bill was supported by over 30 consumer advocacy and other groups, including AARP, Consumer Reports, DC37, Fordham Law School’s Feerick Center for Social Justice, the Legal Aid Society, Mobilization for Justice, and the NAACP.
Bill Whelan, director of District Council 37’s Municipal Employees Legal Services office, said, “Much thanks to Assemblywoman Weinstein for this critically important legislation. COVID-19 has wreaked havoc on New Yorkers, particularly those who have been laid off, taken a wage cut or are reeling from the loss of family members, including caregivers and providers. This legislation will provide sorely needed relief to hundreds of thousands of economically distressed New Yorkers.”
Karuna Patel, deputy director of the Fordham Law School Feerick Center for Social Justice said, “We applaud Assemblymember Helene Weinstein and Senator Kevin Thomas for leading the effort to reform the post-judgment statutory interest rate for consumer debt. This groundbreaking legislation will be life-changing for so many hard-working New Yorkers throughout the state, allowing them to better provide for their families–to stay in stable housing, to put food on the table, to pay for needed medical care–especially as COVID-19 continues to wreak economic havoc. Together with Fordham Law School’s Legislation and Policy Clinic, we thank Assemblymember Weinstein and Senator Thomas for their tireless work on behalf of New Yorkers.”
Keisha Williams, acting executive director of Western New York Law Center said, “For far too long, New Yorkers with consumer debt have been burdened by a punitive and unjust judgment interest rate. We commend the New York State Legislature, especially the bill sponsors, Assemblymember Weinstein and Senator Thomas, and Governor Hochul for enacting the Fair Consumer Judgment Interest Act. This crucial legislation will provide much-needed comprehensive debt-relief to low- and middle-income New Yorkers, especially New Yorkers of color, who have been disproportionately affected by the pandemic. This legislation is an important step toward addressing the issue of unsustainable debt in the state of New York.”
“Assemblymember Weinstein’s groundbreaking law will especially benefit low- and moderate-income New Yorkers who need help the most,” said Carolyn Coffey, director of litigation for Economic Justice at Mobilization for Justice. “By reducing New York’s punishing interest rate on debt collection judgments, which disproportionately impact communities of color, consumers will have a fighting chance to pay these judgments off, including for debts incurred because of the COVID-19 crisis.”