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   From: leroysoetoro@americans-first.com   
      
   https://komonews.com/news/business/federal-judge-consumer-friendly-   
   medical-debt-rule-cfpb-biden-administration-future-lending-decisions-us-   
   district-court-california-colorado-washington-state-cdia-ceo#   
      
   The consumer-friendly Medical Debt Rule, enacted by the Consumer Financial   
   Protection Bureau (CFPB) at the end of the Biden administration, has been   
   thrown out by a judge in Texas.   
      
   The rule would have removed an estimated $49 billion in medical debt from   
   the credit reports of roughly 15 million Americans and prohibited lenders   
   from considering medical information when making future lending decisions.   
      
   The credit reporting industry filed a lawsuit to kill the rule, arguing it   
   could give lenders an “inaccurate and incomplete picture” when making   
   lending decisions and result in reduced access to credit.   
      
   In mid-July, U.S. District Court judge Sean Jordan ruled that the CFPB did   
   not have the legal authority to issue the Medical Debt Rule and vacated   
   it. Jordan, a Trump administration appointee, found that “every major   
   substantive provision of the Medical Debt Rule” exceeded the CFPB’s   
   authority.   
      
   In his ruling, Judge Jordan stated that the medical debt laws in 15 states   
   that ban or restrict the reporting of medical debt would also be voided.   
   Those 15 states are California, Colorado, Connecticut, Delaware, Illinois,   
   Maine, Maryland, Minnesota, New Jersey, New York, Oregon, Rhode Island,   
   Vermont, Virginia, and Washington.   
      
   But as Chi Chi Wu, an attorney at the National Consumer Law Center, noted   
   in a blog post, the court’s ruling “has no legal effect” for those 15   
   states. The final judgment did not contain an order or injunction with   
   respect to state laws, she wrote, “nor could the court have made such a   
   ruling in these circumstances, where the issue was not before it.” The   
   status of these state laws Wu noted, would need to be contested in a court   
   with jurisdiction, presumably in a court located within each relevant   
   state.   
      
   Consumer advocates are disappointed in the court ruling.   
      
   “The rule would have provided immediate relief to people unfairly harmed   
   simply because they got sick,” said Mike Litt at U.S. PIRG. “We have known   
   for years that medical debt doesn’t accurately predict a person’s desire   
   and willingness to pay off loans. Without this rule, millions of Americans   
   who owe tens of billions of dollars in medical debt will continue to be   
   penalized for life events they can’t control, such as getting sick or   
   injured.”   
      
   The Consumer Data Industry Association (CDIA), a trade group representing   
   consumer-reporting agencies, applauded the court’s decision.   
      
   “America’s financial system is the best in the world because it is based   
   on a full, fair, and accurate credit reporting system,” said Dan Smith,   
   CDIA’s president and CEO. “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.”   
      
   In an unusual move, the Trump administration joined the credit reporting   
   industry in asking the court to throw out the Medical Debt Rule.   
      
   A group of 30 Democratic Party and independent senators wants to know why.   
   They believe the rule would have helped consumers without reducing the   
   accuracy of credit scores. They sent a letter to the CFPB’s acting   
   director, Russell Vought, requesting information about his agency’s   
   decision to encourage the court to kill a rule it created, including any   
   communications with debt collection agencies, CNN reported.   
      
   What the Rule Would Have Done   
   The Medical Debt Rule was designed to reduce the financial fallout from   
   unpaid medical debt, a growing problem in the U.S. In announcing the   
   proposed rule, the CFPB said it would help increase credit scores and loan   
   approvals, stop credit reporting companies from sharing medical debts with   
   lenders, and prohibit lenders from making lending decisions based on   
   medical information.   
      
   A CFPB analysis found that medical debt penalizes potential borrowers by   
   making underwriting decisions less accurate, leading to thousands of   
   denied applications for mortgages that consumers would repay. The rule,   
   the agency said, would result in an additional 22,000 mortgages being   
   approved each year and boost the credit scores of Americans with medical   
   debt by 20 points, on average.   
      
   The Medical Debt Rule also prohibited lenders from using medical devices,   
   such as wheelchairs or prosthetic limbs, as collateral for loans or   
   repossessing them if people could not repay the loan.   
      
   In 2023, the three largest U.S. credit bureaus—Equifax, Experian, and   
   TransUnion—announced they would voluntarily change how they treated   
   medical debt by not reporting debts of less than $500 and extending the   
   grace period for reporting unpaid medical debt of more than $500 from six   
   months to one year. Equifax, Experian, and TransUnion also said they will   
   no longer report medical debt after it’s repaid, so it cannot drag down   
   credit scores. Prior to 2023, medical debt stayed in credit files for up   
   to seven years.   
      
   So far, the three major credit bureaus have said they will continue to   
   voluntarily limit how they treat medical debts. But Equifax, Experian, and   
   TransUnion are not the only companies supplying info to lending   
   institutions or to businesses that calculate scores affecting consumers’   
   creditworthiness, insurance rates, and more.   
      
   A Serious and Growing Problem   
   Medical debt is different from credit card debt. It’s not like going on an   
   expensive shopping spree. No one plans to have emergency surgery or   
   expensive chemotherapy. Even for those with insurance, medical bills can   
   be financially devastating.   
      
   About 100 million Americans?including 41 percent of adults?are struggling   
   to deal with medical debt, according to a 2022 investigation by NPR and   
   Kaiser Family Foundation (KFF). A quarter of adults with healthcare debt   
   owe more than $5,000, the survey found. And about one in five, regardless   
   of the amount of debt, said they didn’t expect to ever pay it off.   
      
   Medical debt can be more serious for older adults, who may be dealing with   
   various health issues. A CFPB analysis in 2023 found that for those 65 and   
   older who have medical debt, the average balance was about $13,800.   
      
   Adding to the problem, medical billing mistakes are common and can result   
   in negative information being reported to the credit bureaus. About one in   
   five people said they’d recently received a medical bill they disagreed   
   with or couldn’t afford, according to a survey published in JAMA Health   
   Forum last year.   
      
   When the Medical Debt Rule was announced in June 2024, Rohit Chopra, CFPB   
   Director at the time, said: “The CFPB is seeking to end the senseless   
      
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