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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
practice of weaponizing the credit reporting system to coerce patients
into paying medical bills that they do not owe. Medical bills on credit
reports too often are inaccurate and have little to no predictive value
when it comes to repaying other loans.�
What Can You Do?
If you have medical debt in your credit files, find a way to deal with it.
"If you believe there�s a billing error, get an itemized bill from your provider and challenge the charges,� said Bruce McClary, a senior vice president at the National Foundation for Credit Counseling (NFCC). �That
could be a good first step before negotiating a settlement or working out
a hardship payment plan with the hospital.�
If the charges are accurate and you can�t afford to pay, ask the provider
or hospital about financial assistance programs; most hospital have them,
and even those earning six figures can sometimes qualify. Also ask if
there�s an interest-free repayment program available.
If you can�t get some or all the debt forgiven, consider negotiating a settlement with the debt collector.
Your best resource may be a nonprofit credit counselor. They can help you review your finances, negotiate with creditors, and create a plan to
resolve your medical debt. Contact the National Foundation for Credit Counseling to get started.
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November 5, 2024 - Congratulations President Donald Trump. We look
forward to America being great again.
We live in a time where intelligent people are being silenced so that
stupid people won't be offended.
Every day is an IQ test. Some pass, some, not so much.
Thank you for cleaning up the disasters of the 2008-2017, 2020-2024 Obama
/ Biden / Harris fiascos, President Trump.
Under Barack Obama's leadership, the United States of America became the
The World According To Garp. Obama sold out heterosexuals for Hollywood
queer liberal democrat donors.
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