In early 2025, the Consumer Financial Protection Bureau (CFPB) finalized a rule to ban medical debt from credit reports and prohibit lenders from using it in credit decisions. However, a federal court in Texas vacated this rule in July 2025, meaning most medical debt will likely stay on credit reports for the time being.
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.
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.
Introduced in House (07/29/2025) To amend the Fair Credit Reporting Act to prohibit the inclusion of medical debt on a consumer report, and for other purposes.
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.
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.
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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.
No, debt doesn't truly "reset" after 7 years, but most negative information about it gets removed from your credit report, while the debt itself remains, though its ability to be legally sued over often expires based on your state's statute of limitations (typically 3-6 years, but can vary). The 7-year mark (from the first missed payment date) removes the item from credit reports under the Fair Credit Reporting Act (FCRA). Making payments or acknowledging the debt can sometimes restart the statute of limitations clock, allowing debt collectors to potentially sue for longer, though new laws in some places try to prevent this "zombie debt" effect.
If you don't pay medical bills in 2025, they can still go to collections, damage your credit (though new rules aim to help), incur fees/interest, and potentially lead to lawsuits, liens, or wage garnishment, but you can often negotiate payment plans or seek financial assistance to resolve them, with options like California's new law (SB 1061) preventing some reporting.
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.
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 2025, over $363 million of medical debt has been erased for over 171,000 residents.
No, a hospital cannot turn you away from the emergency room for owing money due to federal law (EMTALA), requiring stabilization for emergencies regardless of ability to pay; however, for non-emergency care, hospitals can refuse treatment, require deposits, or stop services for unpaid bills, especially for private hospitals, though nonprofit hospitals must follow specific financial assistance policies before extreme collections, notes Massachusetts Legal Help and NCLC Digital Library.
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Bankruptcy generally does not cover debts like child support, alimony, most taxes (especially recent ones), student loans (unless undue hardship proven), court fines, restitution, and debts from fraud or drunk driving, plus debts not listed on the petition or incurred for luxury goods shortly before filing. These non-dischargeable debts remain even after bankruptcy, meaning you're still responsible for paying them, notes.
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.
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.
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.