Major consequences of a judge scrapping Biden-era repeal of medical debt reporting rule
A Biden-era measure to protect Americans from financial hardship by removing medical debt from credit reports has been axed by a federal judge in Texas.
The Biden administration worked to help Americans get out from under the burden of debt. However, his major student loan debt forgiveness program was blocked by the Supreme Court. Additionally, since taking office, President Donald Trump’s administration has moved to undo the previous administration’s Plan B to ease student loan debt burdens.
Now a federal judge in Texas has blocked a Biden-era rule that removed medical debt from credit reports. US District Judge Sean Jordan said that the rule, which was finalized shortly before Biden left office, exceeded the authority of the Consumer Financial Protection Bureau (CFPB).
The 2019 appointee of President Trump argued that while the CFPB can allow or encourage creditors to use other categories on credit reports it cannot remove, as is this case, medical debt from reports under the Fair Credit Reporting Act.
The ruling “is the right outcome for protecting the integrity of the system,” according to Dan Smith, head of the Consumer Data Industry Association. He said in a statement that having medical debt in credit reports will help indicate whether consumers will be able to repay their debts.
The CFPB, now under the direction of the Trump administration, has ceased defending the rule.
What will this mean for Americans with medical debt?
As of 2024, medical debt in the United States had soared to $220 billion. When the White House proposed the new rule in 2023, then-Vice President Kamala Harris said that “one in three adults — some 100 million Americans — struggle with unpaid medical bills.”
The move was seen as a way to allow Americans to be better able to “invest in their future.” Without medical debt weighing down credit scores borrowers would be able to get better interest rates when buying a car or home.
According to the Biden administration, removing medical debt from credit reports would have gotten rid of almost $49 billion of debt for around 15 million Americans from their credit reports.
Get your game on! Whether you’re into NFL touchdowns, NBA buzzer-beaters, world-class soccer goals, or MLB home runs, our app has it all.
Dive into live coverage, expert insights, breaking news, exclusive videos, and more – plus, stay updated on the latest in current affairs and entertainment. Download now for all-access coverage, right at your fingertips – anytime, anywhere.