Judge nixes a Biden rule in order to keep medical debt on credit reports

Americans’ unpaid medical bills will remain on their credit reports after a federal judge last week annulled a Biden-era Consumer Financial Protection Bureau (CFPB) rule that would have removed such debt.

Americans’ unpaid medical bills will remain on their credit reports after a federal judge last week annulled a Biden-era Consumer Financial Protection Bureau (CFPB) rule that would have removed such debt. Judge Sean Jordan of the US District Court of Texas’ Eastern District found that the rule exceeded the bureau’s authority under the Fair Credit Reporting Act, agreeing with the arguments of two industry associations. The court found that “every major substantive provision of the Medical Debt Rule” exceeded the CFPB’s authority, Jordan, a President Donald Trump appointee, wrote in his opinion. The rule, which the bureau finalized shortly before the Biden administration left office in January, would have removed an estimated $49 billion in medical bills from the credit reports of about 15 million people. It would have also banned lenders from using certain medical information in loan decisions. The rule also would have prohibited lenders from using medical devices, such as wheelchairs or prosthetic limbs, as collateral for loans and barred them from repossessing the devices if patients were unable to repay the loans. However, lenders would have been able to continue to consider medical information in certain situations, including when a consumer requests a loan to pay health expenses or asks for a temporary postponement of loan payments for medical reasons. Those with medical debt on their credit reports could have received a 20-point boost, on average, in their credit score, the bureau said when issuing the rule in January. Also, the rule was expected to lead to the approval of about 22,000 additional mortgages every year.