A Texas-based federal judge named Sean Jordan has just announced that he will be reversing former President Joe Biden’s rule that allowed people to remove medical debt from their credit reports. Judge Jordan said the decision was made because the rule reportedly doesn’t allow the Consumer Financial Protection Bureau (CFPB) to remove medical debt from reports, as it exceeds the bureau’s authority under the Fair Credit Reporting Act (FCRA), which was enacted in 1970.
This decision will impact approximately 15 million people across America, all of whom carry about $49 billion in medical debt in total and were promised in January—when the rule was announced—that their medical debt would no longer affect their credit eligibility and reports. We have more information on this decision, including what to do if you are one of the people who have medical debt on their credit cards, below.
What to know about the medical debt reversal
When the medical debt removal was announced back in January, the CFPB said it was because they didn’t believe that having that financial rapport on people’s credit card bills was a good indicator of whether or not they would be a good candidate for things like loans, mortgages and more.
“It doesn’t show whether they are likely to pay their mortgage or other debts because there are a lot of inaccuracies and they have a lot of disputes,” Julie Margetta Morgan, former associate director of research, monitoring and regulations at the CFPB, told CBS MoneyWatch.
The rule was then supposed to take effect in March; however, after President Donald Trump took office, it was paused at the request of the CFPB and never actually went into effect.
This then paved the way for Judge Jordan to decide to stop the relief plan altogether, on the grounds of his belief that the “medical debt rule exceeds the [CFBP]’s statutory authority by violating the plain text.”
Dan Smith, CEO of the Consumer Data Industry Association (CDIA), which is a company responsible for representing the nationwide, regional and specialized credit bureaus, also commented on the ruling, saying in a statement, “The rule exceeded the CFPB’s statutory authority because FCRA explicitly allows Credit Reporting Agencies to report, and creditors to obtain and use, information about medical debt that is properly coded to obscure the name of the provider and the nature of the services provided. The Court also noted that any state attempts to prohibit medical debt on credit reports are preempted by Federal law.
“America’s financial system is the best in the world because it is based on a full, fair and accurate credit reporting system. 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. Our member companies remain committed to providing complete and accurate information to support lenders and help consumers access financial products.”
As of publication, it remains unclear if the CFPB will appeal the decision made by Judge Jordan. The CFPB is currently run by Russ Vought, whom President Trump appointed back in February.
What to do if you have medical debt on your credit reports
If you have medical debt on your credit reports and were counting on Biden’s plan to help you remove it, don’t worry, there are still some things you can do.
For example, back in 2024, Experian, Equifax and TransUnion announced that they would be removing any sort of medical debt that was under $500 from people’s credit reports.
You can also still negotiate with your medical provider and dispute errors, as many people have done in the past.
“Providers are more than willing to settle on these things,” healthcare reform advocate Jeff Smedsrud told CNBC Select in January. “They’re willing to get paid something, rather than nothing. Review the charges together and try to negotiate a deal.“
And of course, if needed, most medical practices offer payment plans, which allow you to pay off your bill without any harm to your credit score.
