Hospitals in Virginia lose some of their biggest tools to collect medical debt

New law shields patients from collectors

Virginia is about to change how hospitals and debt collectors can come after patients who owe medical bills.

Gov. Glenn Youngkin signed the Medical Debt Protection Act into law in May 2025, and it kicks in on July 1, 2026.

Del. Karrie Delaney, a Democrat from Fairfax, sponsored the bill, which passed both chambers of the Virginia General Assembly.

The law targets aggressive collection tactics by large health care facilities and medical debt buyers.

Medical debt hits millions of Americans

There’s a reason Virginia lawmakers pushed this through. A 2024 study found that about 36% of U.S. households carried some form of medical debt.

In Virginia, roughly 9% of residents owe money for medical care.

Nationally, an estimated 31 million Americans borrowed a combined $74 billion to cover medical bills in 2024, according to a West Health-Gallup survey.

More than half of Americans said they worried about facing medical debt after a major health event.

Law caps interest at 3% a year

The law puts a tight leash on what hospitals and debt buyers can charge.

Large health care facilities and medical debt buyers cannot tack on interest or late fees for the first 90 days after a final invoice comes due.

After that window closes, interest and late fees max out at 3% of the debt per year.

This applies to licensed hospitals and practices pulling in at least $20 million in annual revenue, plus any debt buyers who purchase that debt.

Collectors can’t foreclose on homes

One of the biggest protections is around housing. The law bars large facilities and debt collectors from foreclosing on a patient’s home during the first 120 days after the final invoice due date.

Placing liens on personal property is also off-limits during that same period. After 120 days, collectors must send at least 30 days’ written notice before taking action.

That notice has to include information about financial assistance options the patient may qualify for.

Wage garnishment blocked for some patients

The law also stops wage garnishment, but not for everyone.

Only patients who qualify for financial assistance under their health care facility’s own policy get this protection. That means patients need to check with their provider to find out if they’re eligible.

The law also bans other extreme collection moves, like causing a patient’s arrest or using a writ of body attachment. These rules are part of the Medical Debt Protection Act’s broader limits on aggressive tactics.

Debt buyers face strict new rules

When companies buy medical debt from hospitals, they now have to play by tighter rules. Interest from debt buyers cannot go above 3% per year.

If a patient qualifies for financial assistance, the original facility can pull the debt back from the buyer. And if a patient overpaid after applying for aid, the facility must send a refund within 60 days.

The original hospital or provider also stays on the hook for anything the debt buyer does wrong.

Patients get 30 days advance notice

Before any aggressive collection action, large facilities and collectors must give patients at least 30 days’ written notice. That notice has to spell out the facility’s financial assistance policy in plain language.

It also must list the specific collection steps planned, along with deadlines.

The goal is to give patients enough time to apply for financial help or set up a payment plan before things escalate.

Virginia already blocked credit report damage

This isn’t Virginia’s first move on medical debt. In 2024, the state passed a law that stops certain health care providers and collectors from reporting medical debt to credit agencies.

That law went into effect on July 1, 2024. The Medical Debt Protection Act builds on it by going after billing, interest, and collection practices directly.

Together, the two laws form a two-step approach to protecting Virginians from the financial fallout of medical bills.

Other states tighten medical debt rules too

Virginia joins a growing list of states cracking down on medical debt collection.

Colorado, New York, California, Connecticut, Illinois, Minnesota, New Jersey, and Rhode Island have all passed laws that ban or limit medical debt on credit reports.

Some states have gone even further with protections against aggressive billing. These state-level efforts have picked up speed as federal action remains stuck in limbo.

Federal medical debt rule faces roadblocks

In January 2025, the Consumer Financial Protection Bureau (CFPB) issued a rule that would have banned medical debt from credit reports nationwide. But a federal court put the rule on hold.

On top of that, lawmakers introduced a Congressional Review Act resolution that could block the rule for good if it passes.

With the federal rule’s future up in the air, state laws like Virginia’s carry even more weight for consumers.

Both sides weigh in on the law

Not everyone supports the new protections. Critics argue that laws like this could cut into hospital revenue and squeeze medical debt buyers, which might drive up costs for patients down the road.

Some also say state laws could step on federal debt collection authority.

Supporters push back, saying the law protects people’s homes, limits runaway interest, and makes sure patients know about financial aid before collectors come knocking.

Virginians should prepare before July 1

The law does not take effect until July 1, 2026, so none of these protections apply yet. It covers large health care facilities and medical debt buyers, not every doctor’s office or clinic.

Patients should ask their provider whether they qualify for financial assistance, since some protections depend on eligibility.

Anyone who believes a facility or collector broke the rules after July 1 may be able to take action under the Virginia Consumer Protection Act.

This article was created with AI assistance and human editing.

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