Consumer bureau proposes removing medical debt from credit reports

This week, the Consumer Financial Protection Bureau (CFPB) proposed a new rule eradicating almost all medical debt from consumer credit reports. This comes after individuals and advocacy groups have fought against the detrimental effects of heightened medical debts on credit reports. Individuals with unsatisfactory credit reports, due to crippling medical debts, have a difficult time sustaining their lives financially, mentally, and emotionally, due to the weight of their medical debt. In a press briefing, Vice President Harris stated, “Medical debt makes it more difficult for Americans to be approved for a car loan, a home loan or a small business loan. All of which in turn makes it more difficult to just get by, much less get ahead. And that is simply not fair.”

Toby Savitz, who works for a Fort Worth nonprofit that assists individuals with credit problems, told the Texas Tribune “medical debt is forcing people here to make agonizing choices.” She added that she believes that “at least half their clients have medical debt.” No large county in the nation has a higher concentration of medical debt than Tarrant County, home to Fort Worth.

A 2018 survey report by the Financial Industry Regulatory Authority found that 29% of Texans, or about 6.2 million adults, have some sort of unpaid medical bills. According to the Urban Institute, the medical debt on average per person for 2018 equated to $2,250 per person.

The CFPB will now solicit public comment on the proposal before promulgating a final rule.