California Attorney General Rob Bonta issued a statement following the signing of Senate Bill 1061 (SB 1061) into law by Governor Gavin Newsom. Authored by Senator Monique Limón and cosponsored by various advocacy organizations, including the California Nurses Association and Health Access California, SB 1061 aims to protect consumers from having their credit damaged by medical debt.
The bill prohibits medical debt from being reported on credit reports, which are typically used to assess an individual's ability to repay future debt. Medical debt is often unforeseen and not a reliable indicator of financial risk. This type of debt can unfairly prevent consumers from obtaining loans, renting apartments, or securing jobs.
"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, medical debt appearing on credit reports makes this a common experience for far too many people,” said Attorney General Rob Bonta. “California today chose to put a stop to this unnecessary and outdated practice. SB 1061 supports Californians’ fair access to essential economic opportunities and a brighter future.”
Senator Monique Limón also expressed her support for the legislation: “I am proud to author legislation to provide relief to Californians suffering from the burden of medical debt. No Californian should be unable to secure housing, a loan, or even a job because they accessed necessary medical care. California is stepping up to protect consumers impacted by the effects of medical debt."
Medical debt remains a significant barrier to employment, housing, and healthcare access. According to the Urban Institute, 7.8% of California consumers with credit reports had medical debt listed on them, with this figure rising to 8.5% for Black Californians. Individuals with medical debt are more likely than those with student loans or credit card debt to report being turned down for rentals or mortgages.
Debt can also hinder employment prospects as employers may use credit reports in hiring decisions, further complicating efforts for individuals trying to pay off their debts. Many consumers delay important medical care due to existing debts, potentially leading to further health issues.
In September 2023, the Consumer Financial Protection Bureau (CFPB) announced it would begin rulemaking processes aimed at removing medical bills from consumer credit reports. In August 2024, Attorney General Bonta sent a letter supporting this proposed rule change.
With SB 1061's enactment, California joins seven other states in supporting both CFPB initiatives and Biden Administration policies against reporting medical debts on credit reports.