A Texas judge has struck down a rule from the Biden-era Consumer Financial Protection Bureau that would have barred medical debt from credit reports. The court ruled the agency overstepped its authority by trying to erase this data, despite federal law allowing it in certain forms.
Key Facts:
- On July 11, U.S. District Judge Sean Jordan vacated a CFPB rule banning medical debt from credit reports.
- The rule, finalized in January, claimed medical debt is not a fair measure of creditworthiness.
- The Fair Credit Reporting Act permits coded medical debt to be included in credit reports.
- Two trade groups sued the CFPB, arguing the rule violated the law.
- The judge ruled that the CFPB had exceeded its authority by attempting to override federal statute.
The Rest of The Story:
The CFPB rule at issue was finalized just weeks before President Donald Trump took office for a second term.
It sought to block all medical debt information from credit reports, arguing such debt is not a good indicator of whether someone will repay loans.
The Fair Credit Reporting Act (FCRA) already allows medical debt to be reported, as long as personal details like the name of the provider and type of treatment are hidden.
The CFPB’s rule went beyond this by banning even the coded data, asserting it unfairly penalized consumers.
Trade groups including the Cornerstone Credit Union League and the Consumer Data Industry Association sued, saying the CFPB had no authority to ban what federal law explicitly permits.
After the leadership shift under the Trump administration, the CFPB agreed and moved to scrap the rule.
Several individuals and advocacy groups tried to block the reversal. They argued the rule protected people with crushing medical bills.
But Judge Jordan ruled they had no legal right to enforce a rule that contradicted federal law, writing the consent judgment was “fair, adequate, and reasonable.”
Commentary:
This ruling is a rare disappointment because, for once, the Biden administration did something reasonable.
Medical debt often arises from emergencies, chronic illness, or surprise billing—none of which are good indicators of personal financial behavior.
However, the judge was correct on the law. The CFPB does not have the power to rewrite Congress’s intent in the Fair Credit Reporting Act.
If reform is needed, Congress—not bureaucrats—should handle it.
Still, this situation points to a much deeper issue: our healthcare system is broken.
Obamacare made things worse by centralizing decisions and expanding bureaucratic red tape.
Today, insurance companies routinely override doctors and deny care based on cost, not patient need.
This leaves ordinary Americans stuck with high out-of-pocket costs and no real way to fight back.
Even with insurance, a hospital visit can leave families drowning in debt—through no fault of their own.
Government interference, mandates, and overregulation have driven up prices, limited choices, and punished those who try to pay their way.
Instead of creating another federal agency rule, the better solution would be to unleash market competition and lower prices.
Restoring power to doctors and patients, not insurance adjusters and federal regulators, is the path forward.
We need real reform that puts people first—and that starts by getting government out of the way.
Medical debt on credit reports is a symptom, not the disease.
Until we address the root problem of inflated costs and restricted care, families will keep falling through the cracks.
The Bottom Line:
A Texas judge struck down a CFPB rule that banned credit agencies from reporting medical debt, saying it went beyond the law.
While the rule was well-intentioned, the real issue lies in a healthcare system wrecked by government interference.
Americans deserve affordable care—and that won’t happen until Washington stops making it worse.
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