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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowA federal judge in Texas has 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.
Removing medical debt from consumer credit reports was expected to increase the credit scores of millions of families by an average of 20 points, the bureau said. The CFPB states that its research has shown outstanding health care claims to be a poor predictor of an individual’s ability to repay a loan, yet they are often used to deny mortgage applications.
The three national credit reporting agencies—Experian, Equifax and TransUnion—announced last year that they would remove medical collections under $500 from U.S. consumer credit reports. The CFPB’s rule was projected to ban all outstanding medical bills from appearing on credit reports and prohibit lenders from using the information.
The CFPB estimated the rule would have removed $49 billion in medical debt from the credit reports of 15 million Americans. According to the agency, one in five Americans has at least one medical debt collection account on their credit reports, and more than half of the collection entries on credit reports are for medical debts. The problem disproportionately affects people of color, the CFPB has found: 28% of Black people and 22% of Latino people in the U.S. carry medical debt versus 17% of white people.
The CFPB was established by Congress after the 2008 financial crisis to monitor credit card companies, mortgage providers, debt collectors and other segments of the consumer finance industry. Earlier this year, the Trump administration requested that the agency halt nearly all its operations, effectively shutting it down.
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Absolutely disgusting to see these activist judges acting against the public’s best interests.
‘I don;’t know the details of the fair credit reporting act, so I don’t know if the there was a grey area in the law, or if this really was an activist decision. The ruling is suspect because it came out of the Federal district in Texas, where right wing groups go to cherry pick right wing Trump appointed judges.
wait, I thought the lap dogs on the Supreme Court just ruled federal district courts cannot grant national injunctions, but only enter orders for their judicial district.
So, if that’s correct, this ruling would only impact people in West Texas….though I doubt the Supreme Court would enforce its precedent since this ruling is probably popular with the lap chihauhaus