The Biden administration is taking steps to prevent medical debt from impacting decisions related to housing, vehicle purchases, and mortgages. The Consumer Financial Protection Bureau (CFPB) announced a proposed rule that would eliminate medical bills from credit reports and prohibit lenders from using medical information in their assessments.
The rule would also safeguard medical devices like wheelchairs from repossession in cases where individuals are unable to repay loans. Vice President Kamala Harris emphasized the importance of ensuring that individuals are not denied economic opportunities due to medical emergencies.
The administration initially revealed plans for this rule in September and aims to finalize it early next year. The CFPB highlighted that medical debt may not accurately reflect an individual's ability to repay a loan, as medical expenses are often unforeseen and beyond the individual's control.
CFPB Director Rohit Chopra pointed out that credit reports frequently contain billing errors, and the proposed rule seeks to prevent debt collectors from using credit reports to coerce individuals into paying disputed bills.
While credit reporting agencies have started removing medical collections debt under $500 from consumer credit reports, the CFPB noted that millions of people still have $49 billion in outstanding medical bills in collections on their credit reports.
The CFPB is inviting feedback on the proposed rule until August 12 to ensure that the final regulation addresses the concerns surrounding medical debt and credit reporting.
