Biden Proposal to Eliminate Medical Debt Reporting

The Biden-Harris Administration recently issued a proposal to eliminate medical debt from credit reporting. If the proposal becomes law, medical debt will no longer be reported by credit reporting agencies nor be a factor in determining credit scores.

A Sweeping Change for Credit Reports

Currently, medical debt affects millions of Americans, with 46 million people having medical debt listed on their credit reports as of 2020, according to the CFBP Report. The CFPB’s proposal seeks to entirely remove this burden, ensuring that no American has medical debt on their credit report. The proposal would have retroactive effect, requiring the removal of medical debt from credit reports of more than 15 million Americans. CFBP’s anticipated result includes an average increase of 20 points in credit scores and could lead to the approval of approximately 22,000 additional mortgages every year.

Protect Patients and Consumers

The proposal also aims to curb the aggressive and often coercive debt collection practices that many patients face from hospitals and third-party debt collectors. Research by the CFPB highlights that tens of millions of Americans are pursued by debt collectors annually, including litigation, wage garnishment, and charging excessive interest. Currently, the CFPB is taking action to ensure that medical debt collections follow the law, including taking supervision and enforcement efforts where appropriate, reminding collection entities about their legal obligations, supporting state-level enforcement actions, and conducting education and outreach activities to inform consumers of their rights.

Call for State Action

The Biden-Harris Administration has called on states to build on these actions to curb coercive debt collections practices. Several states have already taken actions to limit debt collection practices, including to require financial assistance screening by hospitals before debt is sold to a third party, pausing collections on medical debt until patients’ insurance coverage appeals are settled, requiring debt collectors to provide written notices of patient rights and responsibilities, and capping interest rates charged on medical debt.

We will provide updates as the Biden Administration publishes additional information.  For the latest updates and detailed information, please visit the Fact Sheet.