Howell LLP Highlights New Law Protecting Injured Clients from Medical Debt Ruin

Landmark California Law SB 1061 Shields Car Accident Victims from Medical Debt Credit Reporting While They Pursue Justice

LOS ANGELES, Nov. 24, 2025 /PRNewswire-PRWeb/ -- California has enacted Senate Bill 1061 (SB 1061), a landmark law introducing sweeping changes to medical debt enforcement and reporting. The legislation is designed to protect consumers from having medical expenses destroy their credit standing, a particularly acute problem for individuals injured in car accidents or other negligence-related incidents.

Key Protections for Car Accident Victims

The impact of SB 1061 is highly significant for those pursuing a personal injury claim after a car accident. In the wake of an injury, a victim's immediate financial stability is often compromised by high medical bills, co-pays, and deductibles, even before a successful personal injury claim can recover damages. Effective January 1, 2025, the law strictly prohibits the furnishing of medical debt information to consumer credit reporting agencies.

"Our injury clients, especially those involved in car accidents, are often saddled with medical debt that severely damages their finances and credit score," said Jon Howell, a personal injury attorney and founder of Howell LLP. "This new law will be instrumental in protecting individuals from financial ruin caused by unforeseen medical bills while their personal injury case is pending. It ensures victims aren't financially penalized twice, once by the crash and a second time by the credit agencies, for seeking necessary medical care."

For an injured client, the prohibition on negative credit reporting removes a major pressure point. Previously, debt collectors could use the threat of a ruined credit score to pressure injured parties into accepting fast, low settlement offers. SB 1061 empowers victims to focus on their medical recovery and obtaining the maximum fair compensation they are owed.

Debt Voided if Statutory Language is Missing

The second phase of the law imposes a significant safeguard that takes effect on July 1, 2025. Any contract creating medical debt must contain specific, prescribed consumer protection language. Failure to include the exact statutory text will render the debt contract void and unenforceable. This means that if a healthcare provider or hospital fails to use the legally required language in their intake forms or payment agreements for a car accident victim's treatment, the resulting debt may be considered void.

The exact language required is found in Section 1785.27 of the Civil Code, and it serves as a powerful new defense for consumers: "(c) (1) On or after July 1, 2025, it is unlawful to enter into a contract creating a medical debt that does not include the following term: 'A holder of this medical debt contract is prohibited by Section 1785.27 of the Civil Code from furnishing any information related to this debt to a consumer credit reporting agency. In addition to any other penalties allowed by law, if a person knowingly violates that section by furnishing information regarding this debt to a consumer credit reporting agency, the debt shall be void and unenforceable.' (2) A contract entered into on or after July 1, 2025, that does not include the term described in paragraph (1) is void and unenforceable."

For injured Californians, this law provides a crucial new layer of financial protection. Important Note This information is for public awareness and does not constitute legal advice. If you have been injured in an accident and are facing medical debt, you should consult directly with an attorney to discuss your specific rights and legal options under SB 1061 and other applicable laws.

About Howell LLP and Jonathan Howell

Howell LLP is a distinguished California personal injury law firm dedicated exclusively to helping individuals who have been hurt and families who have lost a loved one due to negligence. The firm focuses on securing maximum compensation for clients, including recovery for all medical expenses, lost wages, and pain and suffering. Led by trial attorney Jonathan Howell, the firm leverages deep litigation experience and an insider's perspective to advocate fiercely for accident victims. Mr. Howell, recognized as a Super Lawyer since 2013, ensures the firm utilizes all available consumer protections, including new legislation like SB 1061, to shield clients' financial futures during their pursuit of justice. Contact Jonathan Howell - Personal Injury Lawyer info@howelljustice.com (888) 712-0017 www.howelljustice.com

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https://howelljustice.com/california-sb1061-medical-debt-provider-compliance-export-to-sheets/

Media Contact

Jon Howell, Howell LLP, 1 888-712-0017, alfiya@howelljustice.com, https://howelljustice.com/

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SOURCE Howell LLP