A Texas federal judge just dropped the hammer on a Biden-era rule that would’ve scrubbed medical debt from credit reports, ruling it’s beyond the government’s reach.
The Hill reported that U.S. District Judge Sean Jordan struck down a Consumer Financial Protection Bureau (CFPB) policy on Friday that aimed to erase billions in medical debt from millions of Americans’ credit histories, siding with arguments that the agency overstepped its legal bounds.
Let’s rewind to January, when the outgoing Biden administration pushed through this rule with the CFPB, an independent agency often criticized for its unchecked power.
Judge Jordan, a Trump appointee since 2019, didn’t mince words in his decision, stating the CFPB lacked the authority under the Fair Credit Reporting Act, amended back in 2003, to wipe medical debt from reports.
While the CFPB can nudge creditors to consider other data, Jordan argued this doesn’t extend to erasing entire categories of debt like medical bills. It’s a sharp reminder that even well-intentioned rules must stay within the legal sandbox.
The Biden team claimed this policy would’ve lifted nearly $50 billion in medical debt off the reports of about 15 million Americans, but apparently, good intentions don’t rewrite statutes.
Now, enter President Trump, back in office and already targeting federal agencies like the CFPB for what his Department of Government Efficiency panel calls “waste, fraud, and abuse.”
The CFPB has felt the heat early, with mass layoffs hitting the agency as part of this broader reform effort. Though a separate federal judge in March blocked attempts to gut the agency entirely, the scrutiny isn’t letting up.
Trump’s vision seems clear: trim the fat from bloated bureaucracies, and if the CFPB can’t justify its overreach, it’s fair game for a reckoning.
On the other side of the aisle, former Vice President Kamala Harris championed erasing medical debt during her time in office, calling it a barrier to economic opportunity. “No one should be denied economic opportunity because they got sick,” she said in January.
That’s a noble sentiment, but let’s be real—turning credit reports into a feel-good eraser board risks undermining the system’s integrity, as creditors rely on accurate data to assess risk. If medical debt vanishes, what’s next, student loans?
Harris also touted reducing the “burden of medical debt” through forgiveness pathways and cracking down on predatory collectors, per her January remarks. Fine, but shouldn’t the focus be on why medical costs are crushing Americans in the first place, rather than papering over the problem?
Adding fuel to the fire, Judge Jordan’s ruling lands just days after President Trump signed a sweeping spending and tax bill that slashes Medicaid funding and introduces work requirements.
Critics fear these changes could strip coverage from millions, potentially piling on more medical debt for the vulnerable, a bitter irony given the timing of this credit reporting rollback.
Still, supporters argue that tightening Medicaid ensures aid goes to those truly in need, not a free-for-all entitlement.
Meanwhile, Dan Smith of the Consumer Data Industry Association hailed Jordan’s decision as “the right outcome” for protecting the credit system’s integrity, per Reuters.
That’s a polite way of saying, let’s not turn credit reports into a fantasy novel where debts magically disappear—accountability matters, even when it stings.