California Attorney General Rob Bonta has sent a letter to the Consumer Financial Protection Bureau (CFPB) in support of a proposed rule that would prohibit the reporting of medical debt on credit reports. The rule aims to provide relief for millions of Americans burdened by unexpected or inaccurate medical bills. Earlier this year, Attorney General Bonta, Senator Monique Limón (D-Santa Barbara), and a coalition of consumer advocacy organizations unveiled SB 1061, legislation seeking to protect consumers from having their credit affected by medical debt.
“When someone is scared and in pain, the last thing they should think about is whether seeking care will take away their ability to buy a house or land a job. Unfortunately, this is the reality for many people today,” said Attorney General Bonta. “There is no need for medical debt to appear on credit reports as it is not a good predictor of repayment, and it pushes more and more people into a harmful debt cycle that is very difficult to escape. I thank the Consumer Financial Protection Bureau for their nationwide leadership on this issue and for proposing a rule that sets a floor for consumer protections and allows states to enact stronger protections for their residents.”
Credit reports are intended to gauge an individual’s ability to repay future debt. Medical debt, often unforeseen, can unfairly prevent consumers from obtaining loans, renting apartments, or securing jobs. Millions of Californians are burdened with medical debt due to systemic issues within the healthcare system. Fifty-two percent of adults reported delaying or postponing care due to cost in the past year; 36% had medical debt, and 27% had problems paying or could not pay their medical bills.
In his letter, Attorney General Bonta suggests expanding the definition of medical debt to include all forms of payments made to healthcare providers. This includes debts incurred through credit cards used to pay medical bills. Currently, 25% of Californians use credit cards for such expenses, up from 19% last year—a number higher among historically marginalized groups.
The letter also addresses CFPB’s concerns about identifying medical debt owed to third-party lenders like credit card companies by noting that these lenders already have systems in place to categorize types of debt.
Attorney General Bonta remains committed to protecting Californians' financial health, particularly vulnerable populations. In April, he supported CFPB's proposed overdraft fee rule aimed at closing regulatory loopholes allowing banks to charge undisclosed overdraft fees. In February, he issued letters warning small banks and credit unions that certain fees might violate California’s Unfair Competition Law and federal regulations.
A copy of the letter can be found here.