Medical Debt Forgiveness Act: What It Means for You Now

No federal law called the Medical Debt Forgiveness Act has passed as of 2026, although lawmakers have introduced several proposals to address medical debt.

If passed, these measures could change how medical debt appears on credit reports, limit its use in lending decisions or expand efforts to cancel certain medical debts.

In the meantime, consumers have protections through existing federal and state laws, as well as voluntary credit bureau policies. Here's what the proposals could change and what you can do about medical debt today.

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What Is the Medical Debt Forgiveness Act? 

The Medical Debt Forgiveness Act is a proposed bill that aims to give consumers more protection from the long-term effects of medical debt. The legislation would change how long creditors must wait before reporting unpaid medical debt, expand medical debt cancellation efforts and limit how medical debt is used in credit decisions.

• The Medical Debt Forgiveness Act is only proposed legislation and not law.

• No proposed federal legislation would completely cancel medical debt. 

• The Medical Debt Relief Act of 2025 (S. 2519) would amend the Fair Credit Reporting Act (FCRA), proposing that any unpaid medical debt be removed from credit reports. 

• There is proposed legislation that would amend the Consumer Financial Protection Bureau's (CFPB) regulations to remove unpaid medical debt so that creditors cannot consider this information when making lending decisions. 

• The Medical Debt Cancellation Act would allow the federal government to buy and pay off hospital-held medical debt. 

• States like California, New Jersey, North Carolina and Minnesota have passed their own medical debt laws. 

What the Medical Debt Forgiveness Act Proposes

Several federal proposals aim to change how medical debt is reported, collected or forgiven. However, none of the proposed bills below have become law. The credit bureau changes listed in the table are voluntary policies already in effect, not legislation.

Here's how the proposals and existing policies compare.

Debt Forgiveness vs. Debt Relief — Are They the Same?

Medical debt forgiveness and medical debt relief are related, but they don't always mean the same thing. A settlement is another way to resolve an outstanding balance.

• Debt forgiveness: A hospital, creditor or assistance program cancels some or all of what you owe, reducing the amount you're responsible for paying.

• Debt relief: A broader term for programs or strategies that help reduce or manage medical debt, including financial assistance, payment plans and forgiveness.

• Debt settlement: You negotiate with a provider or collector to resolve a balance, often by paying less than the full amount owed.

What's Protecting You Right Now

Although the proposed federal bills haven't become law, several protections are already available to consumers with medical debt. These include voluntary credit bureau policies, existing federal laws and additional protections in some states.

Credit Bureau Policies

• Under the three major credit bureaus' voluntary policies, medical collections with an original reported balance under $500 are excluded from credit reports.

• Unpaid medical collections generally must be at least 12 months old before appearing on your credit score.

• Paid medical collection accounts are removed from credit reports under the bureaus' voluntary policies.

Federal Protections

• No Surprises Act: Protects patients from many unexpected out-of-network medical bills and provides certain billing protections for uninsured and self-pay patients.

• FDCPA: Requires covered debt collectors to provide debt validation information and gives consumers the right to dispute debts.

• IRS rules: Require tax-exempt hospitals to maintain written financial assistance policies.

State Protections

Wage garnishment rules vary by state. In general, a hospital, medical provider or debt collectors can't simply start taking money from your paycheck because you owe a medical bill. A creditor typically must sue you and win a court judgment before pursuing wage garnishment and some states limit or prohibit garnishment for medical debt altogether.

The protections below show how several states handle medical debt and wage garnishment.

• Delaware: Bans all private creditor wage garnishment including medical debt.

• New York: Specifically prohibits hospitals and medical providers from garnishing wages for medical debt. Also, medical debt cannot be noted on credit reports. 

• North Carolina: Bans all private creditor wage garnishment including medical debt. Domestic support obligations are still collectible.

• Pennsylvania: Bans all private creditor wage garnishment including medical debt.

• Texas: Bans all private creditor wage garnishment including medical debt. There are exceptions for child support, alimony, taxes and student loans. 

• Virginia: Bans wage garnishment and home liens specifically for medical debt.

Who Would Qualify if a Federal Law Passes?

Eligibility requirements have not been finalized because no federal law has been passed. Based on current proposals, potential qualifiers may include:

• People who have medical debt on their credit reports

• People who meet certain income or financial hardship requirements

• People who hold hospital-held medical debt

• Unpaid medical debt that’s already in collections 

• Debt that's large relative to income

How To Get Medical Debt Relief Today

If you're facing medical debt, here’s what you can do:

1. Ask the hospital for financial assistance: Nonprofit hospitals must maintain financial assistance policies for eligible patients. For-profit hospitals may also offer assistance programs.

2. Check your state’s medical debt protections: Some states offer additional protections or relief programs for medical debt relief. 

3. Negotiate with the hospital or creditor directly: Most creditors are willing to work with you. They would rather have some money than no money at all. 

4. Pull your credit report: Check for errors and dispute medical collections that shouldn't appear.

5. Set up a payment plan: This shows the creditor that you’re not ignoring the debt and want to pay it off. If you’re juggling multiple balances, medical debt consolidation may be another option to compare.

6. Work with a credit counselor: A nonprofit credit counseling agency can help you come up with a plan to pay your creditors.

7. Contact an attorney: If your debt is questionable, consult an attorney before paying the debt. 

What To Do if a Collector Is Already Calling

If a debt collector has already contacted you, don't panic. There are still ways to verify the debt, protect your rights and explore repayment options.

1. Don't ignore collection notices or legal documents: Keep records of communications, and respond promptly if you're served with a lawsuit to reduce the risk of default judgment.

2. Request verification of the debt: It’s your right to request and demand proof that the bill is accurate and that the collector has the right to collect it. 

3. Contact the hospital, collection agency or creditor directly: Ask if they'll work with you to establish a payment plan, hardship program or even charity assistance.  

4. Negotiate a payment plan: The creditor or hospital has an incentive to work out something with you. It’s more expensive to file a lawsuit. 

5. Contact a debt counselor: Consider reaching out to a nonprofit credit counseling company so they can help you get a handle on your finances. If medical debt is only one part of your financial situation, learning more about managing credit card debt may help you build a broader repayment plan.

6. Consult with an attorney: If you’ve been served with a lawsuit, contact an attorney for guidance. 

7. File for bankruptcy as a last resort: Filing for bankruptcy generally temporarily stops many collection actions. Whether medical debt can be discharged depends on your situation and the type of bankruptcy.

Bottom Line 

• The Medical Debt Forgiveness Act is proposed legislation but has not passed. 

• Currently, medical debt that’s less than $500 can’t be reported on your credit report. 

• Check your state’s medical debt relief program for help.

• Always communicate with the hospital or medical provider regarding your debt. Silence will not help the situation.

• Review your spending habits to identify cuts that could free up money for the balances you’re working to resolve.

Key Terms

• Medical Debt Forgiveness Act: Proposed federal efforts to limit medical debt's effect on credit and cancel certain balances. It has not become law.

• Medical Debt Relief Act: A proposed bill that would amend the FCRA to keep medical debt off credit reports and bar creditors from using it in lending decisions.

• Medical Debt Cancellation Act: A proposed bill that would fund a federal grant program to buy and cancel hospital-held medical debt.

• No Surprises Act: A federal law that protects you from many surprise out-of-network bills and requires good-faith cost estimates for uninsured and self-pay patients.

• FDCPA: A federal law that limits how debt collectors behave and gives you the right to request written validation of a debt.

• Cancellation of debt income: Forgiven debt the IRS may treat as taxable income, reported on Form 1099-C. Exceptions like insolvency and bankruptcy can reduce or eliminate the tax.

• Charity care: A nonprofit hospital's financial assistance program. Under IRS rules, these hospitals must keep a written policy, though eligibility varies.

Sources

• National Consumer Law Center: The Latest on Keeping Medical Debt Out of Credit Reports

• The Commonwealth Fund: State Protections Against Medical Debt: A Look at Policies Across the U.S. in 2025

• USA.gov: How to get help with medical bills

Information is accurate as of Nov. 5, 2026.

Photo credit: shapecharge /iStock

Parts of this article were created with AI assistance. MoneyLion editors reviewed, fact-checked and edited the final version and are responsible for its accuracy.