The Medical Debt Relief Act of 2023 (H.R.6003/S.3103) is proposed federal legislation aiming to amend the Fair Credit Reporting Act to prohibit consumer reporting agencies from including medical debt on credit reports. It also directs the CFPB to restrict creditors from using medical debt in credit decisions.
This bill prohibits consumer reporting agencies from including medical debt on a consumer report (i.e., credit report).
For medical debt, creditors will typically settle for roughly the amount insurance companies pay for the same services, which is usually much lower than the amount that would be billed to an uninsured person.
Is Medical Debt Being Removed From Credit Reports? In 2023, the three major consumer credit reporting agencies—Experian, TransUnion and Equifax—stopped including medical collection accounts under $500 on credit reports.
What happens if you don't pay hospital bills in Canada? If you don't pay a medical bill in Canada, the amount will usually increase due to interest rates. Unpaid bills can be sent to collections and it will have a negative impact on your credit score.
The statute of limitations also affects credit reporting, as medical debts can remain on credit reports for a certain period, typically seven years from the date of the first delinquency. This means that even if the statute of limitations has expired, the debt may still impact a patient's credit score.
The 7-in-7 rule (or 7x7 rule) in debt collection, part of the CFPB's Regulation F , limits how often debt collectors can call a consumer about a specific debt: they cannot call more than seven times within seven consecutive days, nor can they call again within seven days of a conversation about that debt, preventing harassment and abusive practices, though these are rebuttable presumptions of compliance.
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.
It's quite likely to be sued for medical debt, as it's a major reason for civil lawsuits, with hospitals often filing actions or selling debt to collectors who sue for large balances, especially if you don't respond, leading to default judgments allowing wage garnishment or liens; however, these suits often settle out of court, and it's crucial to respond to any court summons to avoid losing your rights.
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.
If you can't afford your medical bill, you may be able to reduce your bill by negotiating the amount you owe. Dollar For has put together a helpful guide with tips and best practices to walk you through the process.
5 Useful Tips to Help You Erase Medical Debt
Yes, medical debt can be forgiven or reduced, but it often requires specific programs, income qualifications (like being below 400% of the Federal Poverty Level), or state/local initiatives, with organizations like Dollar For helping patients apply for hospital charity care or debt relief, though it's not automatic for everyone and depends heavily on your location and financial situation.
In an oft-cited study, as many as 66.5% of people who file for bankruptcy blame medical bills as the primary cause. As many as 550,000 people file for bankruptcy each year for this reason. This data has been known for many years and has continued even with the passage of the Affordable Care Act.
The 11-word phrase often cited to stop debt collectors is "Please cease and desist all calls and contact with me, immediately," which leverages your rights under the Fair Debt Collection Practices Act (FDCPA) to halt most communication, though it must be sent in writing via certified mail to be legally binding, and collectors can still notify you of lawsuits.
California's Law
Senate Bill 1061 (SB 1061), authored by Senator Monique Limón (D-Santa Barbara) and sponsored by Attorney General Bonta, went into effect on January 1, 2025, and protects consumers from having their credit ruined by medical debt appearing on credit reports.
Medical debt doesn't vanish on its own, but there are scenarios where it can be forgiven, canceled or rendered legally uncollectible. The challenge is that these outcomes often require action, whether applying for hospital assistance, negotiating a settlement or exploring broader debt relief options.
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.