September 25, 2024 – OAKLAND, CA – California Attorney General Rob Bonta on Tuesday issued a statement in response to Senate Bill 1061 (SB 1061) being signed into law by Governor Gavin Newsom. Authored by Senator Monique Limón (D- Santa Barbara) and cosponsored by the Attorney General, and many prominent advocacy organizations including the California Nurses Association, Health Access California, CALPIRG, Consumer Federation of California, and the National Consumer Law Center, SB 1061 will protect consumers from having their credit ruined by prohibiting medical debt from being reported on credit reports. Credit reports are meant to gauge an individual’s ability to repay future debt. Medical debt is often unforeseen and not a reliable indicator of financial risk, yet it can unfairly prevent consumers from getting loans, renting an apartment, or getting a job. This kind of debt on a credit report reflects the financial burden of illness, not an inability to manage finances, including payment of other bills, or posing a credit risk. 

"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 “California today chose to put a stop to this unnecessary and outdated practice.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.” 

“I am proud to author legislation to provide relief to Californians suffering from the burden of medical debt,” said Senator Monique Limón. “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 continues to increase and is a barrier to employment, housing, and the promotion of healthcare access and equity. The Urban Institute reported 7.8% of California consumers with a credit report had a medical debt listed on it, increasing to 8.5% for Black Californians. People with medical debt are more likely to say debt has caused them to be turned down for a rental or a mortgage than people with student loans or credit card debt, increasing their risk of homelessness or being forced to live in substandard housing. Debt can also create barriers for finding employment as employers often use credit reports as a basis for hiring decisions, which in turn, makes it even more difficult to pay off medical debt. Many consumers are also forced to postpone important medical care due to medical debt, which may lead to further illness. In September 2023, the Consumer Financial Protection Bureau (CFPB) announced a rulemaking process to remove medical bills from consumers' credit reports. In August 2024, Attorney General Bonta sent a letter to CFPB in support of the Bureau’s Proposed Rule which would prohibit the reporting of medical debt on credit reports. With the enactment of SB 1061, California now joins seven other states in supporting the CFPB and the Biden Administration by enacting state-level legislation against medical debt credit reporting. 

Source: CA DOJ