Big Breaking comes from Texas, where a federal judge has overturned a key consumer protection rule from the previous administration. This rule aimed to prevent medical debt from appearing on Americans’ credit reports, and its removal is a significant setback for efforts to ease the financial burden of healthcare costs.
On Friday, U.S. District Judge Sean Jordan, who was appointed in 2019, ruled that the Consumer Financial Protection Bureau (CFPB) overstepped its legal authority when it finalised the policy earlier this year. The rule, issued in January as President Biden prepared to leave office, was set to remove nearly $50 billion in medical debt from the credit reports of about 15 million Americans.
The CFPB, an independent agency tasked with protecting consumers from predatory financial practices, has argued that medical debt often results from emergencies, billing errors, or insurance disputes, none of which accurately reflect a person’s creditworthiness. The bureau said wiping such debt from credit reports was a necessary step toward fairer financial assessments.
Judge Jordan, however, disagreed. In his decision, he cited the Fair Credit Reporting Act (FCRA), last amended in 2003which governs the collection and sharing of consumer information. According to Jordan, the law does not grant the CFPB the authority to remove categories of debt, such as medical bills, from credit reports outright. He argued that while the agency can “permit or encourage creditors to consider other kinds of information,” it cannot force them to erase certain types of debt, like medical bills, from credit reports.
Political and Legal Fallout
The ruling is seen as part of a broader political battle over the role of federal agencies in regulating the economy. Since returning to the office, President Trump has revived his administration’s Department of Government Efficiency, a task force aimed at rooting out what it calls “waste, fraud, and abuse” in federal programs. The CFPB has been a frequent target, facing staffing cuts and legal challenges as part of Trump’s broader deregulatory agenda.
Earlier this year, a separate federal judge temporarily blocked the Trump administration from dismantling the CFPB altogether. However, Friday’s decision marks a win for those in Trump’s orbit who have long criticised the agency as an overreach of government power.
Consumer Advocates Respond
This action has immediately drawn intense criticism from consumer advocates and political leaders who strongly supported the medical debt relief. For instance, former Vice President Kamala Harris, who frequently discussed medical debt cancellation during her public appearances in 2024, emphasised the importance of providing people with a fresh financial start after a health crisis.
“No one should miss out on job opportunities or face financial ruin just because they got sick or had an accident,” Harris stated earlier in 2025. “We worked to reduce the burden of medical debt by expanding ways to forgive it and stopping unfair practices by debt collectors.”
Many who advocate for social and economic progress viewed the medical debt rule as a significant step forward in protecting consumers and enhancing healthcare. They frequently point out that unpaid hospital bills are a primary reason people declare bankruptcy in the U.S.
Industry Reaction
Not everyone opposed the judge’s decision. President of the Consumer Data Industry Association Dan Smith praised the ruling, calling it a necessary defence of credit reporting standards.
“This is the right outcome for protecting the integrity of the system,” Smith said in a statement to Reuters. “Credit reports need to reflect accurate, complete information so lenders can make informed decisions.”
Industry groups have long argued that removing medical debt from reports could undermine the accuracy of credit scores and disrupt the lending market.
A Bigger Picture of Health Care Cuts
This ruling comes just days after President Trump signed off on a massive spending and tax package that includes deep cuts to Medicaid, the government’s health insurance program for low-income Americans. One of the most controversial changes? New work requirements that could strip coverage from millions of people raise serious concerns about the accessibility of healthcare in the future.
When you combine the Medicaid cuts with the court’s decision to scrap medical debt relief, it signals a significant shift in federal policy. The focus is clearly shifting away from expanding safety nets for vulnerable Americans and steering instead toward reducing government oversight in financial markets.
What’s Next?
For now, medical debt will remain on credit reports, potentially affecting the credit scores and borrowing power of millions of Americans. Legal experts say the decision could be appealed, but no action has been announced yet by the Biden-aligned coalition that pushed the rule forward.
As the battle over healthcare costs and consumer protections continues, the fate of medical debt and its role in Americans’ financial futures remains at the centre of the debate.
