The CFPB estimated that roughly half of consumers with medical debt on their credit reports would have it removed after this change. In January 2025, the CFPB finalized a rule that would have removed medical debt from credit reports and prohibited lenders from making credit decisions based on medical debt.
About the debt relief program
Public Health partnered with the non-profit organization Undue Medical Debt to implement the program. Residents started to receive letters to say their debt was canceled in May 2025 and, as of December 2, 2025, over $363 million of medical debt has been erased for over 171,000 residents.
Medical debt can also lead people to avoid medical care, develop physical and mental health problems, and face adverse financial consequences like lawsuits, wage and bank account garnishment, home liens, and bankruptcy.
Starting January 1, 2025, California completely baned medical debt from appearing on credit reports or influencing credit scores. This law provides strong consumer protection against medical debt credit reporting - and includes meaningful enforcement provisions that can eliminate debts entirely when violated.
While medical debt remains on your credit report for seven years, the three major credit scoring agencies (Experian, Equifax and TransUnion) will remove it from your credit history once paid off by an insurer.
Introduced in House (10/19/2023) This bill prohibits consumer reporting agencies from including medical debt on a consumer report (i.e., credit report).
Being sued over medical debt is possible, but it's not inevitable. Most providers and debt collectors prefer to resolve accounts before turning to court because lawsuits cost time and money.
Unpaid medical bills can lead to severe legal consequences, including actions from healthcare providers or debt collectors. Ignoring these actions may result in court orders and, in extreme cases, jail time due to contempt of court. Addressing unpaid medical bills promptly is essential to avoid such outcomes.
Certain unpaid medical debt in collections can negatively impact your credit score, but medical debt under $500 has no effect on your credit. However, larger unpaid medical bills can hurt your credit if the debt is sold to a collection agency.
Even if you owe a hospital for past-due bills, that hospital cannot turn you away from its emergency room. This is your right under a federal law called the Emergency Medical Treatment and Active Labor Act (EMTALA).
Small balances are ignored
If you owe as much as $499 and it gets sent to collections and you never, ever pay, it still won't have any impact on your credit score. Note that $500 is the upper limit for any one specific medical debt, not a total debt threshold.
California
California allows healthcare providers to place a lien on your property for unpaid medical bills. This means that if you sell your home, the lien must be satisfied before you receive any proceeds from the sale.
Financial assistance programs, sometimes called “charity care,” provide free or discounted health care to people who need help paying their medical bills. The Affordable Care Act (ACA) requires hospitals with 501(c)(3) nonprofit status to have programs to provide this care .
While there is no longer a federal tax penalty for being uninsured, some states (CA, MA, NJ, and RI) and DC have enacted individual mandates and may apply a state tax penalty if you lack health coverage for the year.
5 Useful Tips to Help You Erase Medical Debt
No More Than Seven Times in a Seven-Day Period
Under the 7-in-7 Rule, debt collectors are restricted to contacting a consumer no more than seven times within any seven days. This rule applies to all communication methods, whether phone calls, emails, text messages, or other forms of contact.
By hospital or provider write-offs
Some providers write off uncollected bills after a certain period has passed, typically when they determine the patient cannot or will not pay. This is largely an accounting action, though, and the debt may still be assigned to collections.
Fifteen states ban medical debt from credit reports, including California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Minnesota, New York, New Jersey, Oregon, Rhode Island, Vermont, Virginia, and Washington State.
Negotiate the amount you owe
Debt collectors might not tell you that medical charges can be negotiated. You can start by going back to the healthcare provider and asking for reductions. Then, you can talk to the debt collector and ask how to lower the amount you owe. A patient advocate in your area can help.
A hospital or other health care provider is less likely to sue you to collect on an overdue bill than are most other creditors, such as credit card companies. This is particularly the case for relatively small medical bills.
What Kinds of Debt Can You Go to Jail For? It's possible to serve jail time if you've failed to pay your federal taxes or make child support payments. You can't go to jail merely for owing credit card, student loan, personal loan or other types of debt, which we'll explain below.
There is no single "minimum" amount that applies to all medical bills, but in many cases, the lowest you can pay is far less than the original balance.
DEBT COLLECTORS CANNOT:
In short: Debt collectors typically start considering lawsuits for amounts around $1,000 to $5,000, but there's no strict rule. If your debt is within that range, or if you've ignored collection calls or letters, you could be at risk of being sued.
And while outright refusing to pay medical bills typically isn't an option, it's possible to get your total bill significantly reduced, especially if you have an experienced legal team building your personal injury claim.