Latest news with #creditreports
New York Times
2 days ago
- Business
- New York Times
Judge Scraps Rule Eliminating Medical Debt on Credit Reports
In another blow to Biden-era financial regulations, a federal judge has blocked a rule that would have removed medical debts from millions of Americans' credit reports. The Consumer Financial Protection Bureau finalized the rule in early January, shortly before President Trump took office. The bureau estimated that the rule, which prohibited credit bureaus from including medical debt in the reports and scores sent to lenders, would have removed $49 billion in medical bills from the credit reports of 15 million Americans. Credit reports are used by lenders to make decisions about whether to approve loans for homes, cars and small businesses. Before the rule took effect, two trade groups credit bureaus and credit reporting agencies sued to block it, arguing that the bureau had exceeded its authority. They filed the lawsuit in the U.S. District Court for the Eastern District of Texas, a popular venue for litigation challenging the federal government's reach. Under the Biden administration, the agency fought the lawsuit, but once Mr. Trump returned to the White House, the new leaders he installed to oversee the consumer bureau reversed course. In April, the bureau joined the trade groups in asking the federal court to strike down the agency's regulation. Last Friday, the court granted their request. Judge Sean D. Jordan wrote that he agreed with the trade groups' argument that the consumer bureau's rule conflicted with Fair Credit Reporting Act, which governs consumer credit reports. That federal law allows lenders and credit reporting agencies to use financial information related to medical debts, and the bureau exceeded its authority by 'fashioning a new regulatory scheme that conflicts with the plain text' of the existing law, the judge wrote. The Consumer Data Industry Association, a plaintiff in the lawsuit to block the rule, praised the judge's decision. 'Information about unpaid medical debts is an important element in assessing a consumer's ability to pay. This is the right outcome for protecting the integrity of the system,' said Dan Smith, the group's chief executive. Want all of The Times? Subscribe.
Yahoo
3 days ago
- Business
- Yahoo
Texas Judge Blocks Biden-Era Rule Meant To Erase $49 Billion In Medical Debt From Credit Reports
A federal judge on Friday vacated a Biden-era rule that would have stripped medical debt from consumer credit reports, siding with credit-industry and Trump-administration arguments that regulators overreached. What Happened: According to a Reuters report, U.S. District Judge Sean Jordan said the Consumer Financial Protection Bureau rewrote the Fair Credit Reporting Act when it finalized the policy in January, a move he ruled exceeded the agency's authority. Trending; GoSun's Breakthrough Rooftop EV Charger Already Has 2,000+ Units Reserved — His decision blocks a measure the CFPB estimated would erase about $49 billion in liabilities from the records of 15 million Americans and bar lenders from using medical data in loan decisions. The judge, a 2019 Donald Trump appointee, noted that Congress lets credit bureaus report coded medical debts and that federal law pre-empts stricter state limits. Experian, Equifax and TransUnion argued the rule would give lenders an incomplete picture of a borrower's ability to repay, even after they voluntarily stopped listing medical collections under $500 in 2022. "This is the right outcome for protecting the integrity of the system," Consumer Data Industry Association chief executive Dan Smith said. Why It Matters: The Biden administration adopted the ban after research showed medical bills, which include shocks from accidents or hospital stays, distort credit scores yet reveal little about long-term solvency. Roughly one in 12 adults carries at least $250 in unpaid medical debt. A CFPB statement in January called the measure a common-sense fix for families who would see scores rise by as much as 20 points. Consumer advocates condemned Friday's ruling and urged the White House to appeal, but the Justice Department has not defended the rule since the CFPB reversed course under President Trump. The policy's fate grew uncertain after that reversal, warning millions could still face higher borrowing costs. The now-vacated rule anchored a broader White House strategy that also steered Medicaid funds to North Carolina hospitals that forgave patient balances. Read Next: Named a TIME Best Invention and Backed by 5,000+ Users, Kara's Air-to-Water Pod Cuts Plastic and Costs — And You Can Invest At Just $6.37/Share Bezos' Favorite Real Estate Platform Launches A Way To Ride The Ongoing Private Credit Boom Photo Courtesy: Salma Bashir on Shutterstock Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? This article Texas Judge Blocks Biden-Era Rule Meant To Erase $49 Billion In Medical Debt From Credit Reports originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
3 days ago
- Business
- Yahoo
Your medical bills will remain on your credit report after all
A federal judged has ruled medical debt can be included on people's credit reports. That overrules a Consumer Finance Protection Bureau edict made in January. Had medical debt been left off of credit reports, it was expected to result in the approval of roughly 22,000 additional mortgages each year. Right before President Joe Biden left office in January, the Consumer Finance Protection Bureau (CFPB) announced a new rule that would remove unpaid medical bills from the credit reports of Americans. Now, a federal judge has vacated that rule. Judge Sean Jordan of the US District Court of Texas' Eastern District found the CFPB exceeded its authority with the rule, citing the Fair Credit Reporting Act. Only Congress, he says, has the ability to write law. Two industry associations had filed suit against the rule. The Trump administration joined those suits after his second term began. Jordan was a Trump-appointed judge. The ruling is likely going to make it harder for many people to get a mortgage or other loan. The rule was expected to result in the approval of roughly 22,000 additional mortgages each year and would have raised the credit scores of people who are carrying medical debt by an average of 20 points. It would have removed $49 billion in medical bills from credit reports and prohibited lenders from factoring that type of debt in when making most loan decisions. 'People who get sick shouldn't have their financial future upended,' CFPB Director Rohit Chopra said when announcing the new rules. '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.' Medical debt often includes mistakes, which can artificially impact credit scores. The CFPB also says medial debt is not a good indicator of whether a person is able to pay other loans. Opponents said the practice would undermine the credit score process. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Gizmodo
3 days ago
- Business
- Gizmodo
Trump-Appointed Judge Kills Rule to Remove All Medical Debt From Credit Reports
Yet another Biden-era reform intended to make life easier for some Americans has been quashed. Late last week, a Trump-appointed federal judge struck down a rule issued by the Consumer Financial Protection Bureau that would have removed all medical debt from being included in people's credit reports. Judge Sean Jordan of the U.S. District Court of Texas' Eastern District issued the decision Friday, declaring that the CFPB's rule surpassed the limits of its authority. The agency previously stated its rule would have significantly improved the credit scores of millions of Americans. It's the latest setback for the CFPB, which the Trump administration has effectively destroyed. In March 2022, the CFPB published a report highlighting the burden of medical debt. It found that Americans owed at least $88 billion of medical debt in 2021, which represented 58% of all third-party debt collection tradelines. Debt collectors also often hounded people who had already paid off their medical bills, it found. The report concluded that medical debt was a poor indicator of people's credit trustworthiness, especially given that it's usually incurred through emergency and unexpected health problems. The CFPB's pressure soon led the three major credit reporting agencies to announce that they would remove many forms of medical debt from their calculation of credit reports. The CFPB pushed further, however, finalizing a rule in early January barring all medical debt from influencing people's credit scores. It estimated that the rule would remove roughly $49 billion in medical bills from the credit reports of 15 million Americans, raising their scores by an average of 20 points. But it didn't take long for the credit and collections industries to strike back with lawsuits. In February, Judge Jordan issued a 90-day stay that suspended the rule from being implemented in March as scheduled. The agency justified its rule as an extension of the power given to it through the Fair Credit Reporting Act—an argument that Judge Jordan ultimately declined to endorse in his ruling. While some states have taken action on their own to reduce the accumulation of medical debt and its effects on people's credit, the reversal of the CFPB's rule will undoubtedly harm the financial health of many Americans, consumer protection advocates have said. 'This ruling is a disappointing setback—but it will not stop the growing movement to protect people from the financial harm of medical debt,' Colin Reusch, policy director at Community Catalyst, a nonprofit focused on health care equality, told NPR Tuesday. Though the federal government could theoretically appeal the court ruling, that seems unlikely, given the current state of the CFPB. The agency is one of many that President Donald Trump has systematically dismantled since taking office. The administration ordered the CFPB to cease nearly all operations in early February and is even trying to rescind settlements against companies already obtained by the agency.
Washington Post
4 days ago
- Business
- Washington Post
Federal judge reverses rule that would have removed medical debt from credit reports
NEW YORK — A federal judge in Texas removed a Biden-era finalized rule by the Consumer Financial Protection Bureau that would have removed medical debt from credit reports. U.S. District Court Judge Sean Jordan of Texas's Eastern District, who was appointed by President Donald Trump, found on Friday that the rule exceeded the CFPB 's authority. Jordan said that the CFPB is not permitted to remove medical debt from credit reports according to the Fair Credit Reporting Act, which protects information collected by consumer reporting agencies.
