By Attorney Raven Beach
Over 20 million people in the US owe medical debt, with over 3 million owing more than $10,000. It’s a stifling statistic that impacts families from all walks of life. In an attempt to address the medical debt crisis in 2023, the three major credit agencies agreed to remove all medical debt less than $500 from our credit reports. They also agreed that medical debts that had been paid in full would be removed. Finally, they agreed that any debt less than one year old would not be included on reports.
Recognizing the need for continued relief, the Consumer Financial Protection Bureau (CFPB) finalized a rule barring ALL medical debt from being included in credit scores from appearing on credit reports in January of this year. The CFPB is a US government agency created to protect consumers in the financial sector by overseeing banks, lenders, and other companies. It was created pursuant to the Dodd-Frank Act under the Obama Administration. The agency has the authority to enforce federal consumer laws and to take action against unfair practices, including filing lawsuits to protect consumers.
A lawsuit alleging that the CFPB had exceeded its authority followed. The Federal Court agreed and, in July 2025, reversed the newly enacted CFPB rule. As you might imagine, the reversal in course impacts an already marginalized population. Statistics show that medical debt tends to impact older adults of color who are in poor health or people who have incomes between 100% and 200% of the federal poverty level. As for the collection agencies, they will continue to limit what appears on credit reports, but still report some information.
To date, fifteen states have prohibited medical debt reporting. Unfortunately, Alabama is not among that number. If you’re facing mounting medical debt, you should obtain your free credit report from all three bureaus. Check the reports for errors, and if you discover medical debt, particularly under $500, file a dispute with that specific credit bureau. Otherwise, contact the collection agency to negotiate the debt. If the issue is still not resolved, consider filing a complaint with the CFPB.
Raven Perry-Beach, Esq.
107 Jefferson St.
Suite 14
Huntsville, AL 35801
(256) 799-0292
* Licensed in Alabama, Tennessee, Massachusetts, and DC
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