• A federal judge has blocked a CFPB rule aimed at removing medical debt from credit reports.
• The ruling affects about 15 million Americans burdened by medical debt estimated at $49 billion.
• The court found the CFPB exceeded its authority under the Fair Credit Reporting Act.
• The decision is seen as a setback for consumer rights advocates seeking relief for those with medical debt.
• The Consumer Data Industry Association supports the ruling, stating it protects the integrity of credit reports.

A federal judge has ruled against a Consumer Financial Protection Bureau (CFPB) policy intended to remove unpaid medical debt from consumer credit reports, a decision impacting approximately 15 million Americans and an estimated $49 billion in medical debt. Judge Sean Jordan of the U.S. District Court for Texas’s Eastern District determined that the CFPB exceeded its regulatory authority under the Fair Credit Reporting Act, which allows reporting agencies to include such debts. This ruling effectively reinstates the financial burdens that many consumers face when applying for loans, as outstanding medical debts can significantly influence lending decisions, according to CBS News and HuffPost.

The initial CFPB rule, introduced at the end of the Biden administration, was aimed at alleviating the financial distress caused by medical debt, particularly as research indicated it does not accurately reflect a consumer's creditworthiness. Former CFPB Director Rohit Chopra highlighted that removing medical debt from credit reports would prevent individuals from losing financial opportunities simply due to healthcare-related expenses, which disproportionately affect marginalized communities. The ruling undermines these efforts and is viewed as a loss for many advocates who argue that medical debt should not determine financial futures, reports NPR.