Rhode Island says debt collectors can no longer touch your home or paycheck over medical bills

Rhode Island draws a new line on medical debt

Rhode Island rang in 2026 with a new law that puts real limits on what debt collectors can do when someone falls behind on medical bills.

Starting Jan. 1, collectors can no longer garnish wages, seize a person’s home, or report the debt to credit bureaus.

Gov. Dan McKee signed the legislation on June 26, 2025, after it passed with near-unanimous support in both chambers of the state legislature.

Here is what the new law covers

The law, formally called the Medical Debt Protection Act, covers money owed for health care services, products, or devices to hospitals, clinics, and licensed providers.

A companion law, S 0172, also caps interest rates on medical debt between 1.5% and 4% per year. That interest rate cap took effect the day McKee signed it and applies to debts built up after June 26, 2025.

Together, the two laws make Rhode Island one of the strongest states in the country for medical debt protection.

The debt does not disappear

This law does not erase what people owe. Debt collectors can still go after payment through other legal methods, like bank levies and voluntary payment plans.

The law changes how medical debt can be collected, not whether it exists.

Patients on financial assistance programs cannot be charged interest or late fees under the companion interest rate law, but everyone else still carries the underlying balance.

Federal rule collapsed, so states stepped in

In January 2025, the federal Consumer Financial Protection Bureau (CFPB) finalized a rule that would have removed medical debt from credit reports for about 15 million Americans.

After the new presidential administration took over, the CFPB reversed course and sided with industry groups challenging its own rule. A federal judge in Texas then wiped out the rule entirely on July 11, 2025.

With federal protection gone, states started writing their own laws.

Millions of Americans carry medical debt

An estimated 15 million Americans still carry medical debt on their credit reports, and total medical debt across the country tops an estimated $220 billion.

Research from the CFPB found that medical debt is a poor predictor of whether someone will repay other kinds of loans, which is a key reason reformers say it should not appear on credit reports at all.

About one in five adults 65 and older carries medical debt, often from a single health event. Even small balances can drag down a credit score and make it harder to get a mortgage or car loan.

Fifteen states have passed similar protections

Rhode Island is one of 15 states that have now passed laws restricting medical debt on credit reports.

The others are California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Minnesota, New Jersey, New York, Oregon, Vermont, Virginia, and Washington.

Rhode Island and Virginia go further than most by also banning wage garnishment and home seizures. Several states passed their laws directly in response to the collapse of the federal rule.

A new federal argument threatens state laws

In October 2025, the CFPB issued a rule arguing that the federal Fair Credit Reporting Act overrides state medical debt credit reporting bans, a reversal from the agency’s previous position.

A debt collector trade group has already filed a lawsuit against Colorado’s medical debt law using this federal preemption argument, and the outcome of that case could affect similar laws in all 15 states, including Rhode Island.

Legal scholars say states have solid ground

Legal scholars note that the federal preemption claim rests on nonbinding language from a court ruling, not settled law.

A federal appeals court previously ruled in a 2022 case that a state restriction on medical debt reporting was not overridden by federal law.

The CFPB’s interpretive rule carries no legally binding force on its own.

Consumer advocates argue that states have clear authority to protect residents from aggressive debt collection, and they say the fight in court is far from settled.

Credit bureaus had already made some changes

The three major credit bureaus quietly started pulling back on medical debt reporting before any state laws were passed. Starting in 2022, they removed paid medical debts and extended the reporting delay to one year.

In April 2023, they stopped reporting medical debts under $500 sent to collections. Those changes cut the number of Americans with medical debt on credit reports roughly in half.

But these are voluntary policies, and the bureaus can reverse them at any time.

More financial pressure could be coming

Consumer advocates warn that 2026 could bring more medical debt, not less.

Enhanced Affordable Care Act premium subsidies face expiration, which could push more Americans off coverage. Cuts to Medicaid and marketplace funding could make it harder for patients to pay their bills.

Advocates say state-level protections like Rhode Island’s may carry even more weight as a safety net if federal support shrinks and more people find themselves uninsured.

How Rhode Islanders can check their reports

If you live in Rhode Island, you can check your credit reports for free at AnnualCreditReport.com.

If medical debt still shows up after Jan. 1, 2026, you can file a dispute directly with the credit bureau. Medical billing errors are common, so reviewing bills before paying is worth the time.

If you cannot afford your bills, ask your provider about charity care or payment plans. Rhode Island requires hospitals to offer free care to patients earning up to 200% of the federal poverty level.

This article was created with AI assistance and human editing.

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