The Biden administration is pushing to prevent medical debt from being considered in most decisions made over whether someone qualifies to rent an apartment, buy a car or take on a mortgage. The Consumer Financial Protection Bureau said Tuesday it is planning a rule that would remove medical bills from credit reports and prevent lenders from making decisions based on medical information.
Quick Read
- Biden Administration Proposal: The Biden administration is pushing to prevent medical debt from being considered in most decisions about renting apartments, buying cars, or taking on mortgages.
- CFPB Rule: The Consumer Financial Protection Bureau (CFPB) plans to remove medical bills from credit reports and stop lenders from using medical information in their decisions.
- Protection for Medical Devices: The proposed rule would also prevent lenders from repossessing medical devices like wheelchairs if loans are unpaid.
- Economic Opportunity: Vice President Kamala Harris emphasized that no one should be denied economic opportunity due to medical emergencies.
- Implementation Timeline: Announced in September, the rule is expected to be finalized early next year.
- Medical Debt as Poor Predictor: The CFPB argues that medical debt is often an unreliable predictor of loan repayment ability due to the unplanned nature of medical expenses.
- Billing Errors: Research indicates frequent billing errors on credit reports; the rule aims to stop debt collectors from using credit reports to pressure people to pay disputed bills.
- Current Credit Reporting: The three national credit reporting agencies—Experian, Equifax, and TransUnion—have already removed medical collections debt under $500 from reports.
- Outstanding Medical Bills: Despite changes, 15 million people still have $49 billion in medical debt appearing in credit reports.
- Public Feedback: The CFPB will accept comments on the proposed rule until August 12.
The Associated Press has the story:
Biden admin seeks to wipe consumer medical debt off most credit reports with proposed rule
Newslooks- (AP)
The Biden administration is pushing to prevent medical debt from being considered in most decisions made over whether someone qualifies to rent an apartment, buy a car or take on a mortgage.
The Consumer Financial Protection Bureau said Tuesday it is planning a rule that would remove medical bills from credit reports and prevent lenders from making decisions based on medical information.
The proposed rule also would prevent lenders from repossessing medical devices like wheelchairs if people cannot repay a loan.
“No one should be denied access to economic opportunity simply because they experienced a medical emergency,” Vice President Kamala Harris said during a conference call laying out the planned rule.
The administration announced plans for the rule in September, and a senior administration official said they expect to finalize it early next year.
The CFPB has said that medical debt can be a poor predictor of whether someone is likely to repay a loan. Those expenses often are not planned like a car or home purchase, and patients may have little control over the progress of a serious illness.
CFPB Director Rohit Chopra also noted Tuesday that research shows billing errors frequently appear on credit reports. He said the rule would prevent debt collectors “from using the credit report as a cudgel” to force people to pay bills they may not owe.
The three national credit reporting agencies — Experian, Equifax and TransUnion — said last year that they were removing medical collections debt under $500 from U.S. consumer credit reports.
But the CFPB said Tuesday that even with that change, 15 million people still have $49 billion in outstanding medical bills in collections appearing in the credit reporting system.
The CFPB will take comments or feedback on its proposed rule until August 12.
