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New Debt Collection Laws in 2024

Sarah Edwards | April 23, 2024

Sarah Edwards
Legal Expert
Sarah Edwards, BS

Sarah Edwards is a professional researcher and writer specializing in legal content. An Emerson College alumna, she holds a Bachelor of Science in Communication from the prestigious Boston institution.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: New debt collection laws in 2024 focus on consumer protection. New York's S.B. S4907A bars medical debt collection and credit reporting. The Fresh Start program helps with defaulted federal student loans, pausing collections. Wage garnishment laws might shift with 22 states raising minimum wages. Understanding these changes can help manage and reduce debt, with debt negotiation and settlement offering useful solutions.

The legal landscape is always changing. And that’s particularly true when it comes to the laws surrounding debt collection. When you’re familiar with the new debt collection laws in 2024, you’ll be better equipped to get yourself out of debt for good.

Check out SoloSuit’s weekly webinar for more debt collection law updates.

If you’re in New York, your medical debt won’t be held against you

This law technically went into effect in December of 2023, but it’s a win for consumers everywhere. You often hear people say that medical debt can’t appear on a credit report or that it can’t be sent to collections. And while it would be wonderful if that were the case everywhere, it isn’t.

However, New York S.B. S4907A is shaking things up in a major way. It includes several provisions designed to prevent people from getting weighed down by medical debt. The bill states that:

  • Medical debt may not be collected by consumer reporting agencies (credit bureaus).
  • Medical debt may not be included in consumer reports.
  • Neither debt collectors nor medical providers may report medical debt to a credit bureau.

Of course, not all states have a bill like this one. Depending on where you are, you might end up incurring a large medical bill and then see that same bill pop up on your credit report.

However, even if your state doesn’t currently protect medical debt from collection agencies, there’s still hope. As more states pass bills like these, fewer and fewer people will suffer credit damage because of medical expenses.

Make debt collectors prove your medical debt is accurate.

If you’ve defaulted on a student loan, you’ll get a fresh start

Between major economic disruptions and the soaring costs of living, it’s no wonder that so many student loan borrowers have defaulted. Having any kind of debt go to collections is bad enough, but the high balances of most student loans mean that having one in collections can cause serious credit damage.

And for many borrowers, high interest rates combined with high loan balances effectively make the loan grow over time.

Fortunately, the Fresh Start program for federal student loans can help you get back on track if you’ve defaulted. When you opt into the program, any collection efforts on your loan will pause, and you’ll be temporarily protected from any kind of negative credit reporting.

However, if you want to reap these benefits as you get your financial health back on track, make sure you opt in by September 30, 2024. If you don’t, your account will go back into default, and that defaulted loan will start showing up on your credit report again. You’ll probably start hearing from collection agencies again, too.

Changes in minimum wages will affect consumer debt

On January 1, 2024, an incredible 22 states raised their minimum wages. That’s a good thing for anyone struggling with debt, and for many people, that extra boost in income can help them keep up with the rising cost of living.

What do wage increases have to do with new debt collection laws in 2024? If you’re currently subjected to wage garnishment or think you might be in the near future, those increased wages might not benefit you quite as much as you’d hoped.

Why? Each state protects a certain portion of each paycheck (after taxes and other legally required deductions) from wage garnishment. Often, the protected amount is some multiple of the federal minimum wage ($7.25 per hour).

For example, there are several states that only protect 30 times the federal minimum wage from garnishment. This means that only $217.50 of your weekly earnings are protected — the rest can be garnished to pay certain debts.

If states like these don’t update their laws to protect multiples of the higher state minimum wage from garnishment, families and individuals in debt will still struggle to afford basic expenses. It’s easier to understand the concept when you look at an example.

Example: In 2023, Joe made $10 per hour (assuming he works 40 hours per week, that means he makes $1600 per month). Joe’s state protects 30 times the federal minimum wage from garnishment ($217.50) each week. This means that $870 of his monthly earnings are safe from garnishment. That’s not a whole lot of guaranteed income, so Joe is excited when he hears his state’s minimum wage is going up to $15 per hour. Now, he’s making $2400 per month! But because his state hasn’t updated the way they protect wages from garnishment, Joe can still only count on $870 per month. He’s making more than he was before, but all that extra money can go to his creditors if his debts are high enough.


It’s important to note that most states say they garnish your “disposable income.” That doesn’t sound too bad at first, but for garnishment purposes, “disposable income” is what you have left after legally required deductions like taxes and mandatory 401(k) contributions.

Settle your debt to avoid wage garnishment.

Knowledge is power: Know the new debt collection laws in 2024

We know that reading up on current debt collection laws isn’t the most exciting thing in the world. But when you want to get out of debt and stay out of debt, keeping track of the latest developments in debt collection laws (and the latest opportunities available to you) is the best way to go.

With dedication and a little planning, you can make 2024 the year you finally get out of debt and stay out of debt.

Settle your debt in 2024

Consider negotiating debt settlement if you’re dealing with debt problems in 2024. It doesn’t matter where you’re at in the debt collection process. You can settle debt after the first collections notice or even during a debt lawsuit.

Watch the following video for tips and tricks from an attorney on how to settle your debt in 2024.

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