News & Impact Stories

Consumers and Groups File for Right to Defend Rule Removing Medical Debt from the Credit Reports of 15M People

February 13, 2025 — Press Release

With CFPB Under Shut-Down Order, Consumers and Groups Seek to Intervene to Defend Lifeline for People Harmed by Medical Debt

HOUSTON – Multiple directly impacted people and groups have asked for permission in federal court to defend the Consumer Financial Protection Bureau’s (CFPB’s) important recent rule to remove medical debt from credit reports. The National Consumer Law Center (NCLC) is representing Texas truck driver David Deeds and District of Columbia resident and father Harvey Coleman, as well as the nonprofit groups Tzedek DC and New Mexico Center on Law and Poverty. Intervention is necessary with the CFPB under a shut-down order and unable or unwilling to defend its medical debt rule.    

Yesterday, these consumers and groups filed a motion for permission to intervene in a lawsuit previously filed by a debt collector, Specialized Collections, Inc., and the trade group for debt collectors, ACA International, in the U.S. District Court for the Southern District of Texas. The debt collectors’ lawsuit seeks to overturn the medical debt rule. 

“This rule is an important protection for Mr. Coleman and the many other people we serve in our legal and financial counseling work who are burdened by the stresses of medical debt and its impact on their finances, access to credit, and access to health care,” said Tzedek DC’s Founding President and Director-Counsel Ariel Levinson-Waldman. “The CFPB’s rule came about after careful consideration of ours and many other interested parties’ comments, and its implementation will ensure medical debt doesn’t continue to harm Americans’ access to credit, housing, and jobs. Tzedek DC is proud to stand with NCLC and the New Mexico Center on Law and Poverty in support of the CFPB’s important rule. We’re especially grateful to people like Mr. Coleman and Mr. Deeds and all the allies from around the country for lending their voices to the continued critical need for this protection.”

“Everyone deserves to live without the fear of medical debt ruining their financial future,” said Arika Sanchez, Healthcare Director of the New Mexico Center on Law and Poverty. “People don’t plan to get sick and end up with unmanageable medical bills that damage their credit scores, making it harder to access credit, safe housing, or even jobs. The medical debt rule is a lifeline for millions. Taking it away now, just when people are finally starting to see relief, would be a devastating setback for people with unfairly damaged credit scores who are trying to rebuild their lives.”

The CFPB finalized the medical debt rule on January 7, 2025, to stop credit reporting companies from reporting medical debts to lenders and to prohibit lenders from making lending decisions based on existing medical debt. Medical bills are frequently inaccurate and are one of the most disputed forms of debt.

But under new leadership, the Bureau has abruptly reversed course. Newly installed CFPB Acting Director Russell Vought ordered all work at the Bureau to cease, including any litigation filings other than to seek a pause. On February 5, the CFPB asked the court in another case to push back the effective date of the rule by 90 days. 

“This rule to provide relief to the 15 million people harmed by the reporting of medical debt had been in the works for several years, and was legitimately and lawfully issued before the new Administration took office,” said Chi Chi Wu, senior attorney at the National Consumer Law Center. “It would eliminate the pressure many people feel to pay off medical debts–which often aren’t even accurate – because of being hounded by debt collectors and worried about harm to their credit scores.”

The big three credit reporting agencies (Equifax, Transunion, Experian) voluntarily removed some medical collections information starting in 2022, but in 2024 the CFPB found that 15 million Americans still had more than $49 billion in outstanding medical debt on their credit reports. 

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