Good news for veterans who owe money to the VA: It’s become much less likely those debts will damage your credit rating.

A new debt reporting rule announced Feb. 2 means “a 99% reduction in unfavorable debt reported to consumer reporting agencies, thus reducing financial distress for veterans,” VA Secretary Denis McDonough said in a press release announcing the change.

About 60,000 VA debts had been reported to credit reporting agencies each year, per the release. According to the Consumer Financial Protection Bureau (CFPB), the new rule allows the VA to report debts to such agencies only if:

• The debt is more than $25.
• All other collection efforts are exhausted.
• The VA determines the debtor is not “catastrophically disabled” and is not entitled to free medical care from the VA.

The head of the CFPB said he hoped the VA’s decision would set “an important new standard” for other providers.

“I expect that many in the health care industry will seek to follow Secretary McDonough’s lead to end the practice of forcing patients to pay up through aggressive credit report coercion,” CFPB Director Rohit Chopra said.

The VA restarted its debt collection efforts on Oct. 1, 2021, after pausing them in April 2020 as part of COVID-19 pandemic relief.

The new rules will not prevent the VA from reporting debts due to “fraud, misrepresentation, or bad faith,” according to the news release.

Some veterans facing financial obligations may be eligible for relief programs, including payment plans or waivers; visit this VA website for details. Veterans with copayment debt questions can call the VA’s Health Resource Center at (866) 400-1238, and those with questions about debts stemming from benefit overpayments can call (800) 827-0648.