A federal judge in Texas overturned a Consumer Financial Protection Bureau (CFPB) rule enabling the erasure of medical debt from credit reports.
The Hill reports US District Judge Sean Jordan stated the CFPB exceeded its’ authority by issuing the rule, which was finalized in January prior to Joe Biden’s departure from the presidency. In his decision, Jordan – who was appointed to the bench during President Trump’s first term – said the Fair Credit Reporting Act did not permit the CFPB to remove medical debt from reports. However, Jordan added the CFPB could recommended that creditors to use other categories of information.
At the time the rule was enacted, the CFPB estimated $49 billion in medical bills would be excluded from credit reports. The agency stated that medical debts “provide little predictive value to lenders about borrowers’ ability to repay other debts,” while then-CFPB Director Rohit Chopra said, “The CFPB’s final rule will close a special carveout that has allowed debt collectors to abuse the credit reporting system to coerce people into paying medical bills they may not even owe.”
