A Trump-appointed judge overturns a Biden-era medical debt rule aimed at removing medical bills from credit reports. Here’s how the decision impacts consumers, financial institutions, and regulatory power in the U.S.
A Controversial Rule Reversed
In a pivotal legal decision with far-reaching implications, a federal judge in Texas has vacated a Biden-era regulation that would have removed medical debt from consumers’ credit reports. The ruling, issued by Judge Sean Jordan—a Trump appointee—granted a request from the Trump administration and financial industry groups to strike down the rule, citing that it exceeded the legal authority of the Consumer Financial Protection Bureau (CFPB).
This move is not just a legal setback for consumer advocates but also a significant rollback of one of the Biden administration’s key consumer protection policies. It reflects the growing tension between presidential administrations over the role and reach of federal regulators in credit scoring and financial transparency.
Understanding the Biden-Era Medical Debt Rule
The now-vacated rule was introduced during the final days of President Joe Biden’s term and supported heavily by Vice President Kamala Harris. The rule aimed to:
| Feature | Description |
|---|---|
| Purpose | Eliminate medical debt from credit reports to improve consumer access to loans |
| Agency | Consumer Financial Protection Bureau (CFPB) |
| Justification | Medical debt is often incurred due to unforeseen illness or injury and does not reliably indicate borrower risk |
| Supporters | Biden administration, Kamala Harris, consumer advocacy groups |
| Opponents | Trump administration, financial industry groups, Consumer Data Industry Association |
The CFPB medical debt policy was based on research indicating that medical bills did not correlate with a consumer’s ability to repay debt and thus should not impact credit scoring systems.
The Court Ruling: Trump Administration Legal Win
On July 11, 2025, Judge Sean Jordan of the U.S. District Court in Texas ruled that the regulation must be vacated, stating it went beyond the legal authority granted to the CFPB by Congress. Jordan’s ruling represents a legal win for the Trump administration and the financial industry.
The CFPB, under new leadership since Trump’s return to office, did not defend the regulation in court—a reversal of its earlier position under the Biden administration. This lack of defense played a key role in the court’s decision.
| Key Parties | Position |
| Judge Sean Jordan | Ruled the CFPB exceeded its authority |
| Trump Administration | Opposed the rule, supported financial institutions |
| Biden Administration | Initially implemented the regulation |
| CFPB (under Trump) | Ceased defending the rule post-inauguration |
Industry Reaction: “Right Outcome” Says CDIA
Dan Smith, head of the Consumer Data Industry Association (CDIA), welcomed the decision. He argued that medical debt provides valuable data on borrower behavior and its removal would distort the credit reporting system.
“This is the right outcome for protecting the integrity of the system,” Smith said.
Financial industry groups echoed his sentiments, noting that removing medical debt could lead to risk mismanagement and impaired lending decisions.
Kamala Harris and the Regulation’s Origins
Kamala Harris, who had vocally championed the regulation during her vice presidency, emphasized that medical debt is a unique form of liability. She argued that:
- Consumers do not choose to take on medical debt.
- Such debt is often unavoidable and unrelated to fiscal irresponsibility.
- Including it in credit reports disproportionately harms lower-income individuals.
In 2024, Harris promoted the policy as part of a broader push for healthcare justice and credit equality.
Broader Impact on Consumers and Credit Scores
The ruling could have direct effects on millions of Americans who hold some form of medical debt. According to data from the CFPB in 2023:
| Category | Statistic |
| Americans with Medical Debt | Over 45 million |
| Median Medical Debt | $500–$1,000 |
| Percentage on Credit Reports | 58% of debt collection entries |
These figures highlight how critical medical debt is in the landscape of American credit scoring. Eliminating medical bills from credit reports could have improved access to loans, housing, and employment opportunities for countless individuals.
Regulatory Power and Legal Precedent
The case also raises questions about the scope of federal agency power, especially that of the CFPB. Critics of the ruling say it sets a dangerous precedent for regulatory rollback when a new administration takes power.
Supporters argue that the CFPB should operate strictly within the framework of congressional authority. The court’s decision reinforces the legal doctrine that agencies cannot reinterpret their powers beyond legislative intent.
Biden vs. Trump Economic Policy Clash
The scrapping of the medical debt rule is emblematic of the broader ideological divide between the Biden and Trump administrations:
| Policy Area | Biden Administration | Trump Administration |
| Consumer Protection | Expand regulation and debt forgiveness | Limit regulation, support creditor rights |
| Credit Reporting | Remove non-consensual debt from scores | Preserve comprehensive debt history |
| Healthcare Debt | Treat as socio-economic issue | Treat as financial behavior indicator |
This judicial win for Trump’s camp may signal further rollbacks of other Biden-era consumer protection regulations in the months to come.
Public and Political Reaction
The response from advocacy groups was swift and critical. Several consumer rights organizations called the ruling a “step backward” in the fight for credit justice. Many pointed out that people suffering from illnesses they never asked for are now at higher risk of credit denial.
Some lawmakers are already calling for new legislation to clarify the CFPB’s authority, ensuring that future consumer-focused rules withstand judicial scrutiny.
What Comes Next?
With the regulation vacated, medical debt will continue to appear on credit reports unless Congress passes new legislation. The Biden administration has not yet announced a countermeasure, but advocacy groups are expected to lobby heavily for a legislative fix.
Financial institutions, meanwhile, will maintain access to medical debt data, arguing that it remains a key indicator of repayment reliability.
Conclusion: A Critical Turning Point in Credit Regulation
The vacating of the Biden-era medical debt rule marks a pivotal shift in the U.S. regulatory landscape. It underscores not only the battle between presidential administrations over policy direction but also the long-standing debate over how creditworthiness should be measured.
As the debate continues, American consumers, especially those burdened with unexpected medical expenses, will remain at the heart of this financial and political tug-of-war.