US EditionFederal judge reverses rule that would have removed medical debt from credit reports
U.S. DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS, JUL 22 – The ruling cancels a Biden-era rule projected to boost credit scores by 20 points for 15 million Americans by removing $49 billion in medical debt from credit reports.
- On July 11, U.S. District Judge Sean Jordan, in the Eastern District of Texas, vacated the CFPB rule targeting removal of medical debt, ruling it exceeded its authority.
- Earlier this year, the Biden-era rule aimed to prohibit lenders from using medical debt data, justified as correcting unfair credit metrics, but a recent court ruling vacated it.
- The Consumer Data Industry Association and the Cornerstone Credit Union League sued the CFPB, arguing the agency exceeded its authority under the Fair Credit Reporting Act, which already permits coded medical debt reporting.
- Consequently, the court order maintains medical collections data for credit assessments, leaving Americans’ unpaid medical bills on credit reports, impacting lenders and consumers.
- With 20% of Americans—and higher rates among Black communities—carrying medical debt, disparities may deepen, as this ruling allows such debt to remain on credit reports, affecting access to credit and financial stability.
181 Articles
181 Articles
Federal Court Reverses Federal Medical Debt Protections
This month, a federal court blocked a rule that was designed to protect people with medical debt by keeping it off credit reports and out of credit decisions. This means that credit reporting agencies and lenders are again free to use unpaid medical bills when determining credit worthiness—a practice that especially harms people with high medical needs and expenses. CFPB Rule Overturned in Court Early this year, just before President Biden left …
Judge scraps Biden-era Medical debt credit reporting rule
(The Hill) -- A federal judge in Texas has reversed a Biden-era rule that permitted medical debt to be wiped from credit reports, according to court documents. U.S. District Judge Sean Jordan, a 2019 appointee of President Donald Trump, said the rule by the previous administration exceeds the authority of the Consumer Financial Protection Bureau. The CFPB, an independent agency, finalized the rule in January as former President Joe Biden was set…
Black Americans hit hard as medical debt rule tossed
A federal judge has blocked a Biden administration rule that would have removed medical debt from credit reports, a move that would have helped around 15 million Americans. The decision hits Black Americans hardest, as they are disproportionately burdened by medical
Millions of people in the United States will again have their medical debts in their credit records. A new court decision overturned the Biden administration’s rule that prevented that debt from affecting their financial history and opportunities.
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