States are moving ahead with new medical debt protections even as the Trump administration and federal courts work to limit or overturn nationwide safeguards, especially around credit reporting.
What is happening at the federal level
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A federal court in Texas vacated the Consumer Financial Protection Bureau’s (CFPB) rule that would have removed medical debt from credit reports nationwide, holding that the Fair Credit Reporting Act (FCRA) allows properly coded medical debt to be reported and preempts conflicting state bans.
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Trump’s CFPB also issued guidance saying states cannot block medical debt from credit reports, arguing that FCRA “generally preempts” such state laws and seeking to invalidate state safeguards already on the books.
How states are pushing back
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Despite the federal stance, lawmakers in at least 15 states have already passed laws to keep medical debt off credit reports, and attorneys general in states like California and Colorado have pledged to continue enforcing their laws.
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Alaska and Michigan legislators are advancing new bills to exclude medical debt from credit reports, while other states are adjusting bill language to reduce the chance of being struck down in court.
States shifting strategy beyond credit reports
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In Indiana and Ohio, lawmakers dropped provisions to remove medical debt from credit reports but are moving ahead with measures that ban wage garnishment for medical debt and cap interest rates (for example, a proposed 3% cap in Ohio).
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Advocates are encouraging states to regulate how medical debt is used rather than the credit reports themselves, such as restricting landlords’ or employers’ ability to consider medical debt and limiting what providers and collectors can share with credit bureaus through contracts.
Other state medical debt relief efforts
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Several states and localities are also directly canceling medical debt: North Carolina’s relief program reports wiping out more than $6.5 billion in medical debt for 2.5 million residents, and New York City has canceled nearly $135 million so far as part of a plan to erase $2 billion in debt.
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New Jersey’s statewide initiative with a nonprofit has forgiven about $1.3 billion in medical debt for roughly 780,000 people over multiple rounds of relief.
Why this matters for patients
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An estimated 100 million people in the U.S. have some form of health care debt, and medical bills can lead to wage garnishment, damaged credit, and difficulty securing housing or loans.
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With federal protections weakened or uncertain, the level of protection patients receive increasingly depends on where they live and how far their state is willing to go to work around federal opposition and preemption arguments.
State laws that try to control what medical debt appears on credit reports are now on a collision course with the Fair Credit Reporting Act (FCRA), because federal regulators and at least one federal court are reading FCRA as broadly preempting those state rules.
Key FCRA preemption rules
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FCRA contains explicit “preemption” provisions saying that, in certain areas, federal rules on credit reporting override conflicting state laws so there is a uniform national system.
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A federal court in Texas recently held that FCRA expressly allows properly coded medical debt to appear on consumer reports, and that any state law that flatly bans reporting such coded medical debt is “inconsistent with FCRA and therefore preempted.”
CFPB’s new interpretation
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In October 2025, the CFPB issued an interpretive rule stating that FCRA generally preempts state laws that regulate the content of credit reports, including laws that bar reporting medical debt or other specific categories of information.
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This reverses a 2022 interpretation that read FCRA preemption more narrowly; the new stance signals that many state bans or limits on medical-debt reporting are vulnerable to legal challenges.
What state laws can still do
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Even under this broad preemption theory, states typically remain free to regulate medical debt in other ways, such as: limiting interest and fees, restricting lawsuits or wage garnishment, imposing charity-care standards on hospitals, or regulating collection practices.
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Some states are already shifting from direct bans on reporting medical debt toward rules that control how creditors and collectors may use debt information, or what providers may share with credit bureaus by contract, in order to reduce preemption risk.
What this means in practice
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Where a state law squarely says “no medical debt may appear on credit reports,” expect creditors, credit bureaus, or trade groups to argue that FCRA preempts it, using both the Texas decision and the CFPB’s new interpretation as support.
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Until higher courts (or Congress) clarify the scope of FCRA preemption, there may be a patchwork of outcomes: some state protections struck down or narrowed, others upheld if they regulate debt collection and use rather than the content of credit reports themselves.
