California program
Medical debt and your credit report (SB 1061)
California protection that keeps covered medical debt off consumer credit reports.
What it is
California protection that keeps covered medical debt off consumer credit reports.
An unpaid medical bill can bring worries about your credit. California limits reporting of covered medical debt. These protections are separate from asking the hospital to reduce the bill itself.
Who can get it
- The state rule applies from January 1, 2025 to covered medical debt.
- The definition covers debt owed to a medical business or its agent for medical services, products or devices.
What you get
- Covered medical debt cannot be reported to consumer credit agencies.
- A covered medical debt knowingly reported becomes void and unenforceable.
What you get
- Civil Code 1785.27 prohibits reporting covered medical debt to consumer credit reporting agencies.
- The debt becomes void and unenforceable when it was knowingly reported.
- Written contracts creating medical debt from July 1, 2025 must contain the legally required wording or are void.
If you decide to apply
- Ask for help checking the credit-report entry and the original bill. If you choose to dispute it, send the credit bureau a written dispute with copies.
- Ask the hospital billing office to check the required medical-debt wording in any payment agreement.
Credit bureau disputes and the hospital billing office · Official page ↗
What happens next
- The dispute response should explain whether the entry was removed. The bureau or legal adviser can confirm the applicable response deadline.
- A refusal can be raised with the California Department of Financial Protection and Innovation or CFPB.
Good to know
A bill still exists unless a rule makes it unenforceable. Paying it with a general-purpose credit card creates ordinary debt.
What else to know
- The law covers medical debt as California defines it, not every ordinary credit-card balance. Medical-only financing needs a check of the creditor, contract and definition. Knowingly reporting covered medical debt can make it void and unenforceable. Covered contracts entered into on or after July 1, 2025 have a separate required-notice rule. Ask a legal advocate to review the evidence before assuming a bill has disappeared.
- Hospital financial assistance and fair-pricing rights address the bill itself.
- A qualifying hospital-assistance payment plan is interest free. A separate law generally sets 5% annual interest on qualifying medical-expense judgments under $200,000 against a person, entered or renewed from January 1, 2023. That is not a 5% cap on every medical bill.
Official sources
“If a medical bill appears on our credit report, which protections apply and what are their limits? Would a dispute help, and could you help us check the debt and documents first?”
Why I’m asking: I want to keep an unpaid medical bill from harming our credit.
More background and detailed requirements
Additional program information and published rules
Who does what
The three parts, side by side. The agency decides; nobody on this page does.
You
Keep medical bills as medical bills (no credit cards), and dispute any medical entry on a credit report
Your social worker
The hospital billing office should know its payment contracts must carry the California law clause. Ask them to confirm.
The care team
Records and letters when the application asks for them.
- Who decides
- No one decides. It is the law. The credit bureau must remove a reported medical debt on dispute
- Ask the billing office
- “California law says this medical bill cannot go on my credit report. Can you confirm that in writing and include it in the payment plan?”
How to apply
First step: If medical debt appears on a credit report, dispute it in writing under California's medical-debt law. Keep a copy.
- Do not put medical bills on a credit card.
- If a medical debt appears on a credit report, dispute it and keep the letter.
Where it starts: Dispute the entry with the credit bureau citing Civil Code 1785.27
What to gather
- The credit report entry
- The original medical bill
How long: Bureaus answer disputes within about a month.
What a yes looks like
The entry removed. The debt void if it was knowingly reported.
What a no looks like, and the next move
A refusal. Complain to the California Department of Financial Protection and Innovation and the Consumer Financial Protection Bureau (CFPB).
Watch out
- A general-purpose credit card used to pay a medical bill is ordinary debt. Whether medical-purpose cards are covered is not settled.
- The bill itself still exists. Use the hospital policy and the fair-pricing rights to cut it.
The numbers and the rules
The arcane layer, kept on purpose. Checked September 8, 2026.
What it is worth
Medical bills stay off your credit report. A debt reported anyway is void and unenforceable.
Legal protection: No furnishing of medical debt to a consumer credit reporting agency (Civ. Code 1785.27(a)) · A medical debt knowingly furnished is void and unenforceable ((b)) · Written contracts creating medical debt from 2025-07-01 must carry the prescribed clause or are void ((c))
What it costs the family: None.
The eligibility facts, as published
- Debt
- owed to a medical provider or its agent for medical services, products or devices (Civ. Code 1785.3(j))
The trap: Paying a medical bill with a credit card to make it go away. That converts protected medical debt into ordinary debt.
Where I read this
- Civil Code 1785.27 (medical debt credit reporting ban) — California Legislature (leginfo), read September 8, 2026
- Civil Code 1785.3 (definition of medical debt) — California Legislature (leginfo), read September 8, 2026