The proposed bill, known as the "medical debt act," aims to prohibit consumer reporting agencies from including information related to medical debt in consumer reports, with specific exceptions. It defines key terms such as "collection agency," "consumer," "consumer report," and "medical debt," establishing a framework for how medical debt is treated in credit reporting. Notably, the bill stipulates that a consumer reporting agency cannot report adverse information concerning medical debt unless it pertains to a credit transaction exceeding the national conforming loan limit set by the Federal Housing Finance Authority. Additionally, collection agencies are restricted from claiming that medical debt will be reported unless it meets the same financial threshold.

Furthermore, the bill mandates that collection agencies inform consumers in their initial written communication that Michigan law prohibits the reporting of medical debt information under certain conditions. Individuals who believe their rights under this act have been violated can pursue civil action for actual damages or injunctive relief, and if they prevail, they may also recover legal costs and attorney fees. This legislation seeks to provide greater protections for consumers regarding medical debt and its impact on their creditworthiness.