Federal Judge Halts Biden Admin’s Effort to Remove Medical Debt from Credit Reports
Federal Judge Halts Biden Admin’s Effort to Remove Medical Debt from Credit Reports
A federal judge has ruled that medical debt can remain on Americans’ credit reports, effectively overturning a key policy by the Biden administration aimed at easing the financial burden on millions. U.S. District Court of Texas’ Eastern District Judge Sean Jordan delivered the decision last week, dealing a significant blow to the Consumer Financial Protection Bureau (CFPB).
The CFPB, a federal banking and financial services watchdog, had introduced a rule in January 2025 to prevent medical debts from appearing on credit reports. The agency argued that medical debt was not a reliable indicator of a borrower’s creditworthiness and should not influence lending decisions. Then-CFPB Director Rohit Chopra stated at the time that the rule would prevent debt collectors from using the credit reporting system to coerce payments for potentially unowed medical bills.
However, the Cornerstone Credit Union League challenged the CFPB’s authority, filing a lawsuit in January. Judge Jordan sided with the league, asserting in his decision that the CFPB had exceeded its jurisdiction with every major substantive provision of its ‘Medical Debt Rule.’
This ruling has drawn immediate reactions. Advocacy groups like Community Catalyst expressed disappointment, calling it a setback for the millions of Americans carrying healthcare debt. Conversely, the Consumer Data Industry Association (CDIA), representing major credit bureaus, praised the decision, stating it protects lenders by ensuring a full and accurate assessment of a consumer’s ability to pay.
With an estimated 100 million Americans grappling with healthcare debt, the decision underscores the ongoing debate over how medical expenses impact financial stability and credit access in the United States.
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