Black Americans Hit Hard as Medical Debt Rule Tossed

July 18, 2025

A Trump-appointed federal judge has blocked a Consumer Financial Protection Bureau (CFPB) rule that would have removed medical debt from approximately 15 million Americans' credit reports. Judge Sean Jordan ruled in favor of credit reporting industry groups, finding that the CFPB exceeded its authority under the Fair Credit Reporting Act. The blocked rule, issued in January under the Biden administration, aimed to prevent medical debt from negatively impacting credit scores, recognizing that such debt often results from billing errors, insurance disputes, or unavoidable emergencies.

Who is affected

15 million Americans who would have had medical debt removed from credit reports
Black Americans (13% report having medical debt compared to 8% of white Americans)
Women, people with disabilities, and those living in the South and rural areas
Low-income households and communities of color
3 million people who owe more than $10,000 in medical debt
20% of Americans with at least one medical debt collection on their credit report

What action is being taken

Judge Sean Jordan has blocked the CFPB's rule on medical debt credit reporting
Private credit bureaus (Equifax, Experian, and TransUnion) are taking limited steps such as removing medical collections under $500
Some states like Colorado and New York are implementing their own protections for consumers
The CFPB is currently in a state of paralysis after Trump reinstalled Russ Vought as acting director

Why it matters

Medical debt significantly impacts credit scores despite not being a reliable indicator of financial behavior
People with medical debt often cut back on essentials, drain savings, borrow from others, or skip needed care
More than half of all collection items on credit reports are for medical bills
Even people with health insurance can face financial ruin from serious illness or emergency
The ruling has racial and economic consequences, particularly for Black communities
Without federal protections, millions remain exposed to credit damage from medical debt

What's next

No explicit next steps stated in the article

Read full article from source: The San Diego Voice & Viewpoint