News & Impact Stories

To Defend Rule Removing Medical Debt from Credit Reports of 15M People, Consumers and Groups File Motion to Intervene in Second Case 

February 25, 2025 — Press Release

With CFPB Under Shut-Down Order, Consumers and Groups Act To Save Lifeline for People Harmed by Medical Debt

SHERMAN, TEXAS  – With the Consumer Financial Protection Bureau (CFPB) under a stop-work order and unable – and apparently unwilling – to defend a rule removing medical debt from credit reports, a coalition of affected consumers and groups are asking for permission to defend the rule in federal court. 

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, in a motion to intervene in a lawsuit filed by Consumer Data Industry Association (CDIA) and Cornerstone Credit Union League, trade associations of credit reporting agencies and credit unions, respectively. CDIA and Cornerstone had filed suit in the U.S. District Court for the Eastern District of Texas seeking to overturn the medical debt rule. 

After first defending the rule in the case, earlier this month the CFPB reversed course and agreed to an order delaying the effective date of the rule and staying the litigation. Because of the CFPB’s change in position, Mr. Deeds, Mr. Coleman, and the non-profits are seeking to intervene to defend the rule–which will have dramatic impacts on their lives and work. It is the second motion to intervene the groups have filed to defend the medical debt rule. Earlier this month, they filed a similar motion in a suit brought by debt collector, Specialized Collections, Inc., and the trade group for debt collectors, ACA International.

“Mr. Coleman is among many of the clients we serve – and among 15 million people across the country – who are severely burdened by medical debt and its effect on their finances, as well as their access to credit and 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 it deserves a rigorous defense. Tzedek DC is proud to stand with Mr. Deeds, Mr. Coleman, NCLC, and the New Mexico Center on Law and Poverty in support of the CFPB’s important rule. We’re grateful to all the allies from around the country for lending their voices to the continued critical need for this protection.”

“Medical debt is devastating to millions of families, through no fault of their own, and this rule has thrown them a much-needed lifeline. Yanking it away now, just when people are finally about to see relief, would be a devastating setback for people with unfairly damaged credit scores who are trying to rebuild their lives,”  said Arika Sanchez, Healthcare Director of the New Mexico Center on Law and Poverty. “Everyone deserves to live without the fear of unmanageable medical debt making it harder to access credit, safe housing, or even jobs.”

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, and medical debt is not a good indicator of credit worthiness.

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 this case to push back the effective date of the rule by 90 days. 

“Consumers rely on the CFPB to protect them and stand up for rules that it’s already put in place after careful thought and consideration,” said Jennifer Wagner, senior attorney at the National Consumer Law Center. “It’s unfortunate that people like our clients now have to step into the shoes of the federal government to defend the rule because it is unwilling to do so.”

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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