Wed Jan 08 19:40:23 UTC 2025: ## Credit Unions Sue to Block Biden Admin Rule Removing Medical Debt from Credit Reports
**Sherman, TX –** A lawsuit challenging a new rule eliminating medical debt from consumer credit reports has been filed in federal court. The Consumer Data Industry Association and Cornerstone Credit Union League are challenging the rule finalized by the Consumer Financial Protection Bureau (CFPB) under the Biden administration.
The rule, which removes an estimated $49 billion in medical debt from the credit reports of approximately 15 million Americans, was enacted despite opposition from Republicans and industry groups. The plaintiffs argue the rule violates the Fair Credit Reporting Act, claiming the act explicitly allows the inclusion of medical debt in credit reports. The lawsuit alleges the CFPB overstepped its authority by prohibiting what Congress explicitly permitted.
The CFPB, however, maintains the rule will improve credit scores for millions, leading to an estimated 22,000 additional low-cost mortgages annually. The agency argues medical debt is a poor indicator of creditworthiness and that the rule will also protect consumers from predatory debt collection practices.
Industry groups counter that removing this information blinds lenders to important risk assessments, potentially leading to a decrease in loan availability. The case, assigned to a Trump-appointed judge, is now before the court. The CFPB declined to comment on the pending litigation.
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