The Intersection of Personal Injury Cases and Medical Debt

Updated January 16, 2026

Personal injury victims from auto accidents, slip and falls, and other personal injury accidents often face a challenging financial predicament during their legal battles. Their case takes time! While our firm is seeking justice through compensation from insurance companies, our clients are having to navigate treatment and a complex landscape of medical bills, collections, and potential credit damage.

A recent rule change by the Consumer Financial Protection Bureau (CFPB) promised to alleviate some of these burdens of medical debt by preventing them from being considered. However, in July 2025, this was overturned by U.S. District Court of Texas’ Eastern District Judge Sean Jordan.

The Wait for Settlement: A Financial Tightrope

Our firm We Win Injury Law handles a wide variety of personal injury cases that range from minor car accidents and limited medical treatment to cases that end up in a lawsuit that can take years. Because these cases can be protracted affairs, sometimes taking months or even years to reach a settlement or jury verdict. During this time, our injured clients are often dealing with mounting medical bills from various providers.

While some medical professionals who frequently work with our office, such as chiropractors, imaging centers, and pain management specialists, are willing to operate on a lien basis, many, like surgery centers and orthopedic specialists are not. It puts our clients in the impossible situation having to decide between getting the medical treatment they so desperately need to heal, while also confronting the high cost of medical bills.

The Lien System: A Partial Solution

Under a lien agreement, the medical providers we work with agree to defer payment until the case settles or reaches a jury verdict. These medical providers are essentially betting on the success of the attorney’s negotiations or success in a lawsuit. In some respects, this is a good thing because the medical provider has to evaluate their treatment within the confides of the available insurance limitations, the strength of our client’s case, and the treatment’s relation to the accident. These lien arrangements can be a lifeline for our We Win Injury Law injured clients, allowing them to receive necessary treatment without immediate financial strain. They do however contain a caveat, if the case does not settle or reach a jury verdict, the client is still responsible for the medical debt or at least a portion of it. This is one reason most lien providers will not work on a lien with clients who do not use experienced personal injury attorneys with a successful track record.

The Challenge with Non-Lien Providers

What makes matter worse, not all medical providers are willing to work on a lien basis.  We Win Injury Law works with a wide variety of medical providers, but there are some who simply refuse to work on a lien basis. Or a client has already worked with a medical provider before retaining an attorney. They are typically crucial services our clients need such as ambulance transport, hospital care, and specialized treatments from surgeons, who often require immediate payment, or prior payment. This creates a significant problem for personal injury victims who may not have the means to pay these bills out-of-pocket while their case is pending. Often times it put our office in the worse position than the lien medical providers. They only had to offer treatment with the prospect of being unpaid, where our law firm would have to advance these costs to stave of collections and damage to our client’s credit.

The Threat of Collections and Credit Damage

The specter of medical bills going to collections looms large over our personal injury clients. If the medical bills remain unpaid, they receive notices that their bills are going to be sent to collection agencies, with warnings about these medical bills potentially causing severe damage to our client’s credit score.

The Ripple Effect of Credit Damage

Our clients having a lowered credit score due to medical collections could potentially have very negative consequences, including:

1. They would have difficulty obtaining loans or credit cards.
2. They would have higher interest rates on future borrowing.
3. They would have challenges in renting apartments or even securing employment.
4. They would have additional financial stress during an already difficult time recovering from their injuries.

The Attorney’s Dilemma

Faced with the potential for our clients’ credit to be impacted, our office often is compelled to advance some costs to cover urgent medical bills. This practice, while beneficial to clients, places a significant financial burden on our law firm, and realistically is just not feasible, the amount of medical bills to extend on credit is impossible. In fact, it also has the potential to create real ethical concerns regarding financial entanglement with clients, choosing to settle for something sooner rather than settling or negotiating for the top amount. Something we simply cannot do.

The CFPB’s Attempt to fix the Problem

On January 7, 2025, the CFPB finalized a groundbreaking rule that promised to alleviate many of these concerns for our personal injury clients. The new rule would have prohibited consumer reporting agencies from including medical debt information on credit reports and credit scores sent to lenders. It also would have put a prohibition on lenders considering the medical debt. Creditors would have been broadly prohibited from obtaining or using any medical information, including medical debt, for credit eligibility determinations.

The CFPB’s Rule Reversal by a Texas Federal Court
Despite its promise, the CFPB’s rule was short-lived. In early 2025, a federal judge in Texas vacated the rule after concluding that the CFPB exceeded its statutory authority in attempting to regulate the use of medical debt in credit reporting and lending decisions. The court held that Congress had not clearly authorized the CFPB to impose such a sweeping prohibition and that the rule conflicted with existing federal credit reporting laws. As a result, the rule was overturned only 6 months after it could take effect, leaving medical debt fully reportable and usable by lenders under the current legal framework.

Impact on our Personal Injury Clients

Because the CFPB rule was overturned before taking effect, medical debt may still be reported to credit bureaus and considered by lenders under existing law. As a result, the credit-related pressures our personal injury clients have historically faced remain largely unchanged. Unpaid medical bills incurred during the pendency of a personal injury case can still negatively affect credit scores, which in turn can create financial stress while a case is ongoing.

This reality continues to influence several aspects of a personal injury claim. Clients may still feel pressure to resolve their cases sooner than advisable out of concern that outstanding medical bills could harm their credit. That stress can distract from physical recovery and complicate financial decision-making during an already difficult period. From a litigation standpoint, the ongoing risk of credit reporting can also limit the amount of time available to negotiate optimal settlements, particularly in cases involving significant medical treatment or delayed resolution.

Accordingly, careful case management and proactive communication with medical providers remain critical. Our office continues to work closely with clients to mitigate credit exposure where possible and to balance the timing of settlement with the client’s broader financial well-being.

Looking Ahead: Potential Challenges and Considerations

Although the CFPB’s rule was vacated, the underlying concerns it sought to address have not gone away. Medical debt remains one of the most common sources of negative credit reporting, and personal injury victims are disproportionately affected. Future regulatory or legislative efforts may revisit this issue, but for now, clients should be aware that:

1. Unpaid medical providers may continue to report balances to credit bureaus and may also pursue traditional collection methods, including litigation and garnishment, where permitted by law.
2. Medical debt incurred as a result of an injury remains the patient’s legal responsibility unless and until it is resolved through settlement, insurance, or other payment arrangements.
3. Outstanding medical debt can still factor into lending decisions, including applications for mortgages, auto loans, or other forms of consumer credit.

Final Thoughts:

The CFPB’s attempted rule change signaled a growing recognition of the unfair burden medical debt places on injury victims, even though that effort was ultimately halted by the courts. For now, the legal landscape remains unchanged, and personal injury clients must continue to navigate the risk of credit damage while their cases are pending.

At our firm, we remain committed to protecting our clients not only in the courtroom or at the negotiating table, but also by helping them understand and manage the financial realities that accompany a serious injury. Staying informed, planning strategically, and advocating for fair compensation remain essential to achieving the best possible outcome. While regulatory change may come in the future, our focus today is ensuring that our clients are prepared, protected, and positioned for a just recovery.