Medical Debt Forgiveness Act: What It Means for You Now
Medical debt affects millions of Americans, which is why lawmakers have proposed the Medical Debt Forgiveness Act. Although the bill has been introduced in Congress multiple times since 2021, it has not become law as of June 2026.
If passed, the legislation would give consumers more time before medical debt appears on credit reports, limit how medical debt is used in lending decisions and expand efforts to cancel certain medical debts.
Find out what the Medical Debt Forgiveness Act would do and what protections are available under current law.
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Key Takeaways
The Medical Debt Forgiveness Act is a proposal, not a law you can use today. As of June 2026, no federal bill has passed.
Some protections already exist, but several come from the credit bureaus, not Congress. Medical debt under $500 is currently left off reports as a voluntary bureau policy.
Federal law still gives you real tools right now. The No Surprises Act, the Fair Debt Collection Practices Act (FDCPA) and IRS rules requiring nonprofit-hospital financial assistance all apply today.
Don't wait on a law to deal with medical debt. Ask about financial assistance, check your state's protections and dispute any medical collection under $500 on your report.
Summary generated by AI, verified by MoneyLion editors
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 Main Proposals Would Change
Not all medical debt reforms have become law. Here's how the major proposals compare and what their current status is.
Proposal | What it Would Do | Current Status |
|---|---|---|
Medical Debt Forgiveness Act | • Gives consumers more time to pay medical debt before it goes to collections • Removes paid medical debt from credit reports | Proposed in 2021 and not passed |
Medical Debt Relief Act of 2025 | Ban all paid and unpaid medical debt from credit reports | In Congress |
Medical Debt Cancellation Act | Direct the federal government to pay off hospital-held medical debt via grants | Stalled |
Bureau-related changes | • Removed paid medical collections from all reports • Extended the reporting waiting period to 12 months • Banned reporting of medical debt under $500 | In effect, but voluntary and not considered legislation |
What's Protecting You Right Now
Proposals are not measures that can actually protect you. They are not considered law. Only legislation passed by Congress is considered enacted law and enforceable.
Those who have medical debt currently have certain protections:
Credit Bureau Policies
Unpaid medical debt under $500 cannot be reported to the credit bureaus.
Unpaid medical debt over $500 has to be in collections for at least 12 months before it can be reported to Experian, TransUnion and Equifax.
If you pay down your medical debt, it must be removed from your credit report immediately.
Federal Protections
Under the No Surprises Act, you need advance notice of unexpected charges and consent for emergency care.
Debt collectors under the FDCPA must provide proof of the debt if requested by the consumer.
Nonprofit hospitals must have a financial assistance program as required by the IRS.
State Protections
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 are on Medicaid are prioritized in most proposals
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:
Ask the hospital for financial assistance. Nonprofit hospitals are required to provide assistance. For-profit hospitals may have assistance programs.
Check what your state offers in terms of medical debt relief.
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.
Pull your credit report. Check for errors and actively remove medical debt on your credit report that’s less than $500.
Set up a payment plan. This shows the creditor that you’re not ignoring the debt and want to pay it off.
Work with a credit counselor. A nonprofit credit counseling agency can help you come up with a plan to pay your creditors.
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.
Always communicate. Do not ignore calls and emails. The more silent you are, the more likely you’ll receive a default judgment.
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.
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.
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.
Contact a debt counselor. Consider reaching out to a nonprofit credit counseling company so they can help you get a handle on your finances.
Consult with an attorney. If you’ve been served with a lawsuit, contact an attorney for guidance.
File for bankruptcy as a last resort. Bankruptcy prevents a creditor from collecting the judgment amount from you.
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.
FAQs
Has the Medical Debt Forgiveness Act been signed into law?
To date, the Medical Debt Forgiveness Act has not been signed into law.
Will medical debt be forgiven automatically if a law passes?
It’s unlikely under federal law that all medical debt will be forgiven automatically, but consumers may receive additional protections. The level of forgiveness will depend on state laws, too.
Does debt forgiveness under these proposals count as taxable income?
Debt forgiveness over $600 is considered taxable under the IRS regulations.
What's the difference between the Medical Debt Relief Act and the Medical Debt Cancellation Act?
The Medical Debt Relief Act impacts the way unpaid medical debt is reported on your credit, while the Medical Debt Cancellation Act focuses on wiping out medical debt completely.
Can I get medical debt removed from my credit report right now?
Under current policy, unpaid medical debt under $500 isn't reported to the credit bureaus. Unpaid medical debt over $500 generally must be in collections for at least 12 months before it can be reported.
What should I do while I wait to see if a federal law passes?
Pull your credit report and dispute any unpaid medical debt that’s less than $500, look for state protections regarding medical debt, find out about financial assistance and pay off any medical debt in collections if you can.
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.
Summary generated by AI, verified by MoneyLion editors
Sources
National Consumer Law Center. 2025. "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 June 17, 2026.
Photo credit: shapecharge /iStock
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