Gov. Kathy Hochul has approved a new law that is meant to lower sky-high statutory judgment interest rates in consumer debt cases from 9% to 2% — a measure meant to aid low-income New Yorkers and those who have struggled financially due to the pandemic. 

The interest rate in these cases has not been changed in 40 years and addresses the increasing number of unpaid judgment amounts. The pandemic in the last two years has led to record levels of unemployment, meanwhile, New York's jobs recovery has lagged other parts of the country. 

"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," said Assemblywoman Helene Weinstein. "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."

The law will apply retrospectively to consumer debt judgments that are also not yet fully paid when the measure takes effect. 

Advocacy organizations, including the NAACP and the AARP, backed the legislation. 

"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," said Keisha Williams, the acting executive director of the Western New York Law Center. "This legislation is an important step toward addressing the issue of unsustainable debt in the state of New York."