PLANO – A federal court has granted two individuals and two consumer groups the right to defend a Consumer Financial Protection Bureau rule.
On Friday, the U.S. District Court in the Eastern District of Texas ruled to allow the parties to defend the CFPB rule that forbids the inclusion of medical bills on credit reports and would require credit reporting companies to remove medical bills and information from credit reports, as originally mandated by law.
As of June 2023, 15 million people had more than $49 billion in outstanding medical debt on their credit reports, even after the big three national credit reporting companies (Equifax, Transunion, and Experian) had voluntarily removed some medical bills from credit reports, according to the National Consumer Law Center.
The National Consumer Law Center represents Texas truck driver David Deeds, District of Columbia resident and father Harvey Coleman, and consumer groups Tzedek DC and New Mexico Center on Law and Poverty.
“We intervened in this case for this exact purpose: to defend the CFPB’s rule where the current CFPB would not, and we will continue to support this carefully considered rule to provide relief to 15 million people across the country who are severely burdened by medical debt, including tens of thousands of our neighbors in DC,” said Ariel Levinson-Waldman, Tzedek DC’s founding president.
The motion to intervene was granted 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, court records show.
“We are eager to defend the CFPB’s rule to provide much-needed relief for consumers with medical debt,” said Jennifer Wagner, senior attorney at NCLC. “We appreciate the court allowing us to stand up for ordinary people left behind as the current administration turns its back on consumers.”
The CFPB finalized the medical debt rule on Jan. 7, 2025, to stop credit reporting companies from reporting medical bills to lenders and to prohibit lenders from making lending decisions based on medical bills and collections.
“This rule would help me and my family by getting medical debt off my credit report, giving us the opportunity for a better future,” said Harvey Coleman, one of the individuals intervening in the lawsuit. “I’m proud to have the opportunity to stand up for other people who also need the help that the rule promises.”
Last week, the CFPB abandoned defense of the rule, joining a consumer reporting trade association and a credit union trade association in asking the court to vacate the rule.
The court has now allowed Coleman, Deeds, Tzedek DC, and New Mexico Center on Law and Poverty to step in to defend the rule.
“Medical debt is devastating to millions of families, through no fault of their own, and the CFPB’s medical debt rule provides a much-needed lifeline,” said Arika Sanchez, healthcare director of the New Mexico Center on Law and Poverty. “Losing the protections provided by this rule would throw people with unfairly damaged credit scores into turmoil – making it harder to access credit, obtain safe housing, or even get a job.”
Case No. 4:25-cv-00016-SDJ