Federal Judge Overturns Ruling on Medical Debt Erasure from Credit Reports

By Adriana Morga and Cora Lewis | The Associated Press Medical bills were on display in Temple Hills, Maryland, as of June 26, 2023. (AP Photo/Jacquelyn Martin, File) NEW YORK (AP) — A Texas federal judge has dismantled a finalized rule from the Biden administration's Consumer Financial Protection Bureau (CFPB) aimed at erasing medical debt from credit reports. U.S. District Court Judge Sean Jordan, appointed by former President Donald Trump, ruled on Friday that the CFPB exceeded its jurisdiction. He asserted that the agency lacks the authority to expunge medical debt according to the Fair Credit Reporting Act, which maintains the integrity of data gathered by consumer reporting agencies. The elimination of medical debt from credit reports was projected to boost credit scores for millions of families, with gains averaging 20 points. The CFPB noted that outstanding healthcare debts inadequately reflect an individual's repayment capabilities yet are frequently cited to reject mortgage applications. The three major credit reporting agencies—Experian, Equifax, and TransUnion—previously committed to removing medical collections under $500. The CFPB anticipated that its rule could clear $49 billion in medical debts affecting 15 million Americans, with disparities evident among racial groups regarding debt prevalence.