A federal judge has granted a 90-day stay on the Consumer Financial Protection Bureau’s new rule that would bar credit reporting agencies from including medical debt on consumer credit reports. The stay pushes the rule’s effective date to June 15, 2025, and delays further court proceedings in a legal battle brought by the Consumer Data Industry Association and the Cornerstone Credit Union League.
Why it matters: The rule, issued in January by the outgoing Biden administration, aimed to remove $49 billion in medical debt from credit reports, impacting 15 million Americans. The lawsuit argues that the CFPB exceeded its authority by overriding the Fair Credit Reporting Act, which expressly allows consumer reporting agencies to report medical debt under certain conditions.
Key developments:
- New leadership at CFPB: The lawsuit initially named Rohit Chopra as the defendant in his capacity as CFPB Director. However, President Donald Trump replaced Chopra with Treasury Secretary Scott Bessent as Acting Director of the CFPB. The new leadership is reviewing the rule, having instituted a freeze on issuing new regulations and enforcement actions.
- CFPB agrees to delay: In a court filing, CFPB attorneys stated they would not oppose a temporary halt to the rule while the agency re-evaluates its position.
- Judge’s order: Judge Sean Jordan of the District Court for the Eastern District of Texas granted the stay and rescheduled the hearing on the plaintiffs’ motion for a preliminary injunction to May 12, 2025, in Plano, Texas.
Excerpts from the court filings:
- “The Bureau’s new leadership needs time to review and consider its position on various agency actions.” – CFPB’s motion to stay the case.
- “It is black letter law that an agency cannot prohibit through regulations what Congress has expressly permitted by statute.” – Plaintiffs’ argument challenging the rule.
What’s next:
