Lawmakers Consider Restrictions On Medical Debt Collections

Lawmakers are weighing new limits on how aggressively medical debt can be collected, including caps on garnishments and stricter rules before debts go to collections. This debate is happening alongside broader federal and state efforts to keep medical debt from ruining people’s credit and to curb coercive collection tactics.​

What lawmakers are considering

At a recent state Senate hearing, legislators discussed a bill that would restrict how much of a patient’s wages can be garnished for unpaid medical bills and set clearer rules for repayment plans. Sponsors described the goal as finding a “sweet spot” that lets providers get paid while preventing families from being pushed into financial ruin over medical debt.​

The proposal under discussion would also tighten requirements before hospitals or collectors can sue patients, making sure people are informed of charity care or financial assistance options first. Some lawmakers are also looking at longer grace periods and clearer itemized billing so patients can dispute errors before debts are sold to collectors.​

Credit report and federal context

Separately, the Consumer Financial Protection Bureau (CFPB) finalized a rule in early 2025 to remove medical bills from most credit reports and bar lenders from using medical debt in credit decisions, which would have eliminated about 49 billion dollars in reported medical bills for roughly 15 million people. A federal court later vacated this rule after industry lawsuits, leaving those federal protections on hold and shifting more attention back to Congress and the states.​

Even with the rule vacated, major credit bureaus have already voluntarily stopped reporting certain smaller medical collection accounts, and lawmakers are watching how that affects access to credit. Policymakers are also weighing how federal preemption under the Fair Credit Reporting Act interacts with newer state laws that try to ban medical debt reporting altogether.​

State-level medical debt protections

Some states have already adopted strong protections, such as banning the reporting of medical debt to credit bureaus, capping interest rates on medical debt, and prohibiting wage garnishment for medical bills. For example, a new California law bars providers and collectors from reporting medical debt to credit agencies starting in 2025, and similar proposals are pending in other states.​

Other common measures include requiring hospitals to screen patients for financial assistance before sending accounts to collections, pausing collection efforts while insurance appeals are pending, and limiting home liens over medical debt. A recent review found that as of mid‑2025, only a minority of states have comprehensive medical-debt protections, which is one reason lawmakers in additional states are now considering new limits on collection practices.​

Key differences: collection vs credit reporting

Collection reforms focus on how and when providers and collectors can pursue payment, while credit-reporting reforms focus on whether medical debt can appear on consumer credit files at all. Lawmakers in some states are moving on both fronts at once, combining stricter limits on garnishments, lawsuits, and interest with bans or limits on reporting medical debt to credit bureaus.​

Lawmakers indicate that next steps will depend on how negotiations over garnishment caps and repayment standards play out in committee, and on how the courts continue to treat federal efforts to regulate medical debt on credit reports. Patients’ advocates are urging faster action, arguing that unchecked medical collections keep many families in long-term financial distress after an illness or injury.​