Texas judge blocks Biden-era medical debt rule, putting credit scores and coverage at risk for millions
TOI World Desk | TIMESOFINDIA.COM | Jul 16, 2025, 00:33 IST
( Image credit : AP, TOIGLOBAL )
A federal judge in Texas overturned a Biden administration rule that aimed to remove billions in medical debt from credit reports, impacting millions of Americans. The ruling favored industry arguments about credit system integrity, while critics, including Vice President Harris, warned of dire consequences for those struggling with healthcare costs.
In a significant legal decision with broad financial implications, a federal judge in Texas has overturned a rule introduced during the Biden administration that would have eliminated billions of dollars in medical debt from consumer credit reports. The ruling, handed down by U.S. District Judge Sean Jordan, affects as many as 15 million Americans and halts a policy intended to boost credit scores and increase access to loans, mortgages, and rental housing.
Judge Jordan, a Trump appointee, ruled that the Consumer Financial Protection Bureau (CFPB) overstepped its legal authority under the Fair Credit Reporting Act by attempting to erase medical debt. While the agency can guide creditors on how to evaluate consumer creditworthiness, the court found it cannot unilaterally remove entire categories of debt from credit reports.
How the ruling impacts consumers
Had the rule gone into effect, the CFPB estimated it would have wiped nearly $50 billion in medical debt from credit files, potentially raising credit scores by an average of 20 points for millions. The policy, finalized in January 2025, aimed to remove a major obstacle to financial stability for Americans grappling with unpaid healthcare bills.
According to CFPB analysis, removing medical debt from credit reports could have led to an estimated 22,000 additional mortgage approvals annually. The Biden administration viewed the policy as a key component of its broader economic equity agenda.
Now, that potential relief is in jeopardy.
A political and legal flashpoint
The ruling marks another chapter in the Trump administration’s effort to roll back Biden-era consumer protection rules. Trump’s Department of Government Efficiency has targeted what it deems regulatory overreach, and the CFPB has faced both budget cuts and operational restructuring since he returned to office.
Medical debt became a defining issue during the 2024 election cycle, with former Vice President Kamala Harris making full medical debt cancellation a central plank of her campaign. She had emphasized that no one should be denied opportunity due to health-related financial burdens.
“This decision will have real consequences for millions of Americans,” Harris said in a statement following the ruling. “People are still choosing between paying for medicine and making rent.”
Industry reaction and credit reporting concerns
Supporters of the judge’s ruling argue that the CFPB’s attempt to remove medical debt would have undermined the structure of the credit reporting system. Dan Smith, president of the Consumer Data Industry Association, welcomed the decision, calling it essential for preserving financial accuracy and accountability.
“Medical debt may be unfortunate, but it is still debt,” Smith said. “The credit system relies on complete information. Selectively erasing debt undermines lender confidence and consumer responsibility.”
Healthcare policy shifts on the horizon
The court’s decision also comes just days after President Trump signed a sweeping spending and tax bill into law. The package includes significant Medicaid cuts and introduces new work requirements for benefits. Health policy experts warn that these changes could lead to millions losing access to healthcare coverage—possibly exacerbating the very medical debt crisis the CFPB rule sought to address.
As the legal and political battles over medical debt and healthcare policy continue, millions of Americans are left in financial limbo. With high medical costs and patchy insurance coverage remaining persistent challenges, the conversation around credit fairness and healthcare affordability is far from over.
Judge Jordan, a Trump appointee, ruled that the Consumer Financial Protection Bureau (CFPB) overstepped its legal authority under the Fair Credit Reporting Act by attempting to erase medical debt. While the agency can guide creditors on how to evaluate consumer creditworthiness, the court found it cannot unilaterally remove entire categories of debt from credit reports.
How the ruling impacts consumers
Had the rule gone into effect, the CFPB estimated it would have wiped nearly $50 billion in medical debt from credit files, potentially raising credit scores by an average of 20 points for millions. The policy, finalized in January 2025, aimed to remove a major obstacle to financial stability for Americans grappling with unpaid healthcare bills.
According to CFPB analysis, removing medical debt from credit reports could have led to an estimated 22,000 additional mortgage approvals annually. The Biden administration viewed the policy as a key component of its broader economic equity agenda.
Now, that potential relief is in jeopardy.
A political and legal flashpoint
The ruling marks another chapter in the Trump administration’s effort to roll back Biden-era consumer protection rules. Trump’s Department of Government Efficiency has targeted what it deems regulatory overreach, and the CFPB has faced both budget cuts and operational restructuring since he returned to office.
Medical debt became a defining issue during the 2024 election cycle, with former Vice President Kamala Harris making full medical debt cancellation a central plank of her campaign. She had emphasized that no one should be denied opportunity due to health-related financial burdens.
“This decision will have real consequences for millions of Americans,” Harris said in a statement following the ruling. “People are still choosing between paying for medicine and making rent.”
Industry reaction and credit reporting concerns
Supporters of the judge’s ruling argue that the CFPB’s attempt to remove medical debt would have undermined the structure of the credit reporting system. Dan Smith, president of the Consumer Data Industry Association, welcomed the decision, calling it essential for preserving financial accuracy and accountability.
“Medical debt may be unfortunate, but it is still debt,” Smith said. “The credit system relies on complete information. Selectively erasing debt undermines lender confidence and consumer responsibility.”
Healthcare policy shifts on the horizon
The court’s decision also comes just days after President Trump signed a sweeping spending and tax bill into law. The package includes significant Medicaid cuts and introduces new work requirements for benefits. Health policy experts warn that these changes could lead to millions losing access to healthcare coverage—possibly exacerbating the very medical debt crisis the CFPB rule sought to address.
As the legal and political battles over medical debt and healthcare policy continue, millions of Americans are left in financial limbo. With high medical costs and patchy insurance coverage remaining persistent challenges, the conversation around credit fairness and healthcare affordability is far from over.