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DebtHammer's free guide to debt relief details several options for New York residents, including hardship programs, consolidation and other financial resources.

Debt Relief in New York

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New York is home to 19.84 million people, making it the fourth most populous state in the country. Of those people, approximately 13% live below the federal poverty line, higher than the official poverty rate of 11.6%.

Although the average personal income for a New York resident is $70,460, many New Yorkers struggle to make ends meet. The average debt per capita is around $53,620 (excluding mortgage), a hefty sum considering the high cost of living.

If you’re a New York resident seeking debt relief or if you need other financial help, here’s what you should know.

Are you eligible for debt relief?

If you’re a New York resident, DebtHammer may be able to help.

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New York debt statistics

Here are some recent credit and debt-related statistics in New York State:

  • Average household debt: $51,280
  • Average student loan debt: $37,678
  • Average credit score: 722
  • Median mortgage payment: $2,114
  • Personal bankruptcies: 20,000+
  • Personal income/Annual Mean Wage: $70,460
  • Child poverty: 17.7%
  • Unemployment: 4.3%

Debt relief options for New York residents

If you need debt relief in New York but don’t know where to start, here are your best options:

  • Debt settlement: Debt settlement is the process of negotiating with creditors to try to reduce how much you owe on a particular debt. It’s possible to do debt settlement on your own, but most people go through a professional company.
  • DIY plans: A DIY debt settlement plan is another way to lower the amount you owe, but it does require good negotiation skills. Even if you can’t settle your debts, you may be able to get a better repayment plan, waive late fees, or lower interest rates. This could also help if you’re being harassed by debt collectors.
  • Debt management plan: Offered through credit counseling agencies, DMPs are three- to five-year plans that can help you pay off debts. With a DMP, you may be able to get better terms and rates, too.
  • Debt consolidation loans: With a debt consolidation loan, you can merge several unsecured debts into one loan with a single monthly payment. This may be a good option if you have excellent credit as it could come with a lower interest rate and save you money.
  • Bankruptcy: Personal bankruptcy — Chapter 7 or Chapter 13 — could be an option if you’re drowning in debt and nothing else works. Speak with a bankruptcy attorney about whether this option is right for you.

Debt settlement in New York

Debt settlement may be right for you if you’ve fallen behind on bills or are unable to make multiple monthly payments on your debts. It may also be a good option if you’re starting to use expensive forms of credit — ex. payday loans and credit cards — for daily expenses.

With a debt settlement, your creditor agrees to accept a payment that’s smaller than what you originally owed on your debt. This can reduce your overall debt amount, as well as cut down on how much you pay each month on your minimums.

Debt settlement may not help with secured debts, but it can help with many unsecured debts, including:

  • Credit cards
  • Personal loans
  • Student loans in default
  • Old judgments
  • Department store cards

If you go through a professional debt settlement agency, the entire process can take between two and four years, on average.

Debt settlement is not a guarantee, and it’s not without its risk. For example, a debt settlement company may tell you to quit making payments to your creditors to increase the odds of success. This could lead to late payments and damage your credit score. Any settled debt could be considered taxable by the IRS, too.

If successful, you could get your debts settled by as much as 50% — sometimes more. This could make it easier to get back on track financially and repay any debts you still owe.

New York debt relief companies

If you’re looking for help with expensive debts, these top New York debt relief companies may be able to help:

Debt settlement attorneys

For New Yorkers interested in debt settlement, here are a few attorneys to consider:

Debt resources for New York residents facing hardship

The state of New York has many programs and resources for residents facing hardship. Some programs offer financial assistance for things like utility bills, rent, or mortgage payments. Others can help with childcare or healthcare costs.

State hardship programs

New York has multiple state and federal programs to help people dealing with debt or expensive bills, including:

Food assistance

About one in 10 New Yorkers — or 1,882,580 people — face hunger. Nearly 600,000 of that number is children. Fortunately, New York also has several food banks and pantries for those facing food insecurity or hunger.

Here are a few of the main food banks:

Here’s a comprehensive list of New York State’s Food Pantries. Feeding America New York also has a directory of local food banks throughout the state.

Debt collection laws in New York

Recently, the state of New York passed a new law banning debt collectors from filing lawsuits on old debts. Along with this, New York has many state-specific regulations about debt collection. For example:

  • Debt collectors cannot call a consumer more than seven times within a seven-day period.
  • Debt collectors may only communicate with consumers within certain other regulations. For example, they cannot call between 9 pm and 8 am.
  • Once they’ve made contact, a debt collector cannot call again within a seven-day period.
  • A debt collector may not contact an individual at work if asked not to.

Many of these state regulations also reflect the federal Fair Debt Collection Practices Act (FDCPA), which protects consumers from unfair, deceptive, or coercive debt collection practices.

The New York Attorney General’s recent press release goes into more detail about the New York Consumer Credit Fairness Act and changes in debt collection. Among other things, the statute of limitations on consumer debts has been reduced to three years.

Read more about the consumer credit fairness act and how it affects you as a New Yorker resident.

Income and employment in New York

New York currently ranks 22nd in job creation with 305,100 new jobs. With that said, the current unemployment rate is still 4.3%, which is a bit higher than the national unemployment rate of 3.7%. It is a major improvement from what it was during the height of the pandemic — 16.5%.

The state of New York is not a right-to-work state, but it is an employment-at-will state. This means an employer can fire any employee with or without a reason (barring illegal ones).

How to apply for unemployment benefits in New York

There are two ways to apply for unemployment benefits in New York:

  • Online: Create an NY.gov ID account online. Then, start the online application and follow the prompts until it’s done.
  • Phone: Call (888) 209-8124 between 8:00 am and 5:00 pm EST Monday through Friday.

You’ll need your driver’s license or motor vehicle ID card, current mailing address, SSN, details about your previous employers, and a few other documents.

Most people who are eligible for benefits receive their first payment within two to three weeks from when their claim is completed and processed. After applying, you’ll also receive a Monetary Determination detailing your weekly benefit amount and other key details. You’ll need to recertify for benefits every week you’re unemployed.

Banking and taxes in New York

In New York, the personal income tax rate ranges from 4% to 10.9%. It’s based on your adjusted gross income as well as your filing status. Here are the current tax brackets for single filers:

  • 4.00% for the first $0 to $8.500
  • 4.50% for $8.501 to $11,700 (plus $340)
  • 5.25% for $11,701 to $13,900 (plus $484)
  • 5.90% for $13,901 to $21,400 (plus $600)
  • 5.97% for $21,401 to $80,650 (plus $1,042)
  • 6.33% for $80,651 to $215,400 (plus $4,579)
  • 6.85% for $215,401 to $1,077,550 (plus $13,109)
  • 9.65% for 1,077,550 to $5 million (plus $72,166)
  • 10.30% for $5,000,001 to $25 million (plus $450,683)
  • 10.90% for anything above $25 million (plus $2,510,683)

For married people who file jointly, the income tax roughly doubles for each tax bracket. If you live in New York City, you may also be subject to local income tax, which ranges from 3.078% to 3.876%.

The tax rate can vary based on certain factors, so be sure to check the current rates before filing.

One other thing to note is that 5.9% of New Yorkers are currently unbanked. This means they have neither a checking nor a savings account.

New York housing market

In New York, the homeownership rate is an estimated 54.2%. According to Zillow, the current average housing price in the state is $782,640, up 6.2% over the past year. This is more than double the national average.

The median mortgage payment is $2,156. In contrast, the median rent payment in New York City is $2,118 for a two-bedroom apartment. 

The New York State Homeowner Assistance Fund was established to help homeowners with housing costs. The application period is now closed, but there is a waiting list for those who need assistance.

Retirement in New York

The average New Yorker needs about $1,277,315 set aside in order to live comfortably in retirement. However, the average retirement savings amount is closer to $382,027.

Average New York insurance premiums

The average homeowners’ insurance premium in New York is $1,289 annually for a $250,000 dwelling coverage. This is about average in the country.

A standard car insurance policy with full coverage is around $2,996 yearly. This is nearly $1,200 higher than the national average cost.

Payday lending status in New York: Prohibited

Payday loans are illegal in many states throughout the United States, including New York.

  • Maximum loan amount: N/A
  • Maximum Interest Rate (APR): N/A
  • Minimum loan term: N/A
  • Maximum loan term: N/A

Statute of limitations on debt in New York

The statute of limitations is what limits how long a creditor or debt collector has to sue a borrower for defaulting on an account. In New York, it’s three years:

  • Medical debt: 3 years
  • Credit card: 3 years
  • Auto loan debt: 3 years
  • State tax debt: 3 years

Help for Veterans

In 2020, New York had 747,157 Veterans. The New York Department of Veteran Affairs has many resources available to help those facing homelessness, unemployment, or other hardships.

Facilities in New York

Looking for a VA near you? Here’s a list of the main ones in the state:

Employment resources for Veterans

For Veterans seeking employment, here are some state and nationwide options:

  • CareerOneStop for career advice, resources, and a job search portal
  • MilitaryHire.com for Veterans and spouses seeking employment in the civilian sector
  • VeteranRecruiting.com for online career fairs and various employment resources
  • Helmets to Hardhats for networking and transitioning into the construction industry
  • Hiring Our Heroes for hiring opportunities and networking with potential employers
  • My Next Move for employment opportunities that use military skills in civilian life
  • Warriors to Work for connecting Veterans with companies

The bottom line

If you’re struggling with the high cost of living or large amounts of debt, New York debt relief exists in many forms. This includes state and federally-funded programs and resources, as well as options like debt settlement, debt consolidation, and credit counseling. Don’t hesitate to get the help you need when you need it.

FAQs

How long can a debt be collected in New York?

Creditors or debt collectors can file a lawsuit to try to collect on a debt for three years on most consumer debts. Prior to the Consumer Credit Fairness Act of 2021, it was six years.

When does the statute of limitations begin in New York?

The statute of limitations begins on the date of the last activity on the account.

Am I responsible for my spouse’s debt if I get divorced in New York?

This depends. New York is an equitable distribution state, meaning debts are divided based on what’s considered fair. This does not always mean it will be split equally.

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