Harris Announces Final Rule to Eliminate Medical Debt from Americans’ Credit Reports

January 7, 2025 TruthUSA

Harris mentioned that states and localities have successfully eliminated more than $1 billion in medical debt.

On Tuesday, Vice President Kamala Harris revealed a final rule from the Consumer Financial Protection Bureau (CFPB) that will eradicate $49 billion in unpaid medical bills from the credit reports of 15 million Americans.

This initiative is expected to boost their credit scores by an average of 20 points, potentially allowing for about 22,000 additional mortgage approvals each year, according to Harris’s office.

“Today, we are expanding on this important work by announcing an unprecedented final rule that ensures medical debt will no longer affect your credit score,” Harris stated. “This change will be transformative for millions of families, making it easier for them to secure a car loan, a home loan, or a small-business loan.”

The CFPB previously acknowledged that medical billing often contains inaccuracies, such as inflated charges or fees for services that were never provided, making it a less reliable indicator for future repayment ability.

Harris stated that over $1 billion in medical debt has already been eliminated for more than 700,000 Americans by state and local governments using funds from the American Rescue Plan (ARP), part of a federal initiative aimed at wiping out $7 billion in medical debt by 2026.

States involved include New Jersey, Connecticut, and various counties in Louisiana, Michigan, and Illinois.

In August, North Carolina announced that 99 eligible hospitals are participating in a program aimed at eliminating up to $4 billion in existing medical debt for close to 2 million residents of the state.

To alleviate medical debt for Americans, the federal government has taken steps to widen avenues for debt forgiveness and has acted against “predatory debt collection practices,” the vice president affirmed.

“Having dedicated my career to advocating for consumer protection and reducing medical costs, I am confident that our groundbreaking rule will empower more Americans to save money, accumulate wealth, and flourish,” she stated.

This rule originated from the CFPB’s June 2024 proposal, which aimed to prohibit creditors from factoring in medical debt during loan assessments. The CFPB revealed that medical debt constituted $88 billion in reported debts on credit reports in 2022, with 46 million individuals having medical debts recorded on their credit reports in 2020.

In 2023, the three major credit reporting agencies—Equifax, Experian, and TransUnion—committed to eliminating all medical collections under $500 and were instructed not to report invalid medical debt. Despite this, the CFPB found that as of 2024, 15 million Americans still carry $49 billion in unpaid medical bills in collections on their credit reports, leading to the proposed revisions regarding the treatment of medical debt in credit evaluations.

Source link