Available at: https://scholarship.law.unc.edu/ncbi/vol29/iss1/12
Introduction:
The United States of America leads the developed world in medical spending. So it is no surprise to find that Americans struggle to keep up with medical debt. The Consumer Financial Protection Bureau (“CFPB” or “Bureau”) has sought to understand how this trend has affected Americans’ credit scores and ability to access credit. Over the past decade, the CFPB produced a series of studies and reports that culminated in a finalized rule, published in January 2025. The finalized rule accomplishes two victories for the Bureau. First, the rule eliminates an exception in the Fair Credit Reporting Act (“FCRA”) that allows creditors to access consumers’ medical financial information for credit eligibility determinations. Second, the CFPB has created a definition for “medical debt information” to be implemented under Title 12, Chapter X of the Code of Federal Regulations. The new term “medical debt information” is significant because it ensures that medical debt information includes debts held by third parties and agents of healthcare providers.
Leading up to the finalization of the rule, the credit industry paid attention to the writing on the wall. By April 2023, TransUnion, Equifax, and Experian—the three major Consumer Reporting Agencies (“CRAs”) in America—had eliminated qualified medical debt from consumer reports. The decision to eliminate this type of debt from consumer reports is significant, given that medical debt makes up 58% of all debts that third parties report in collections. In turn, credit score companies adopted new methods for calculating scores for consumers that exclude medical debt that is in collections. Because of this, the voluntary industry changes have already reached many of the consumers affected by medical debt. Now, with a final rule on the matter, the CFPB has codified and broadened the protections offered by the industry via regulation.
The CFPB’s rule raises important questions about how its regulatory authority is used and how the CFPB can help consumers with medical debt. To address these questions, it is necessary to understand the scope of the CFPB’s authority. The CFPB’s rule contemplates the limits of the effect of its rule change. As this Note will argue, the limits on the effect the CFPB can have on medical debt issues can be traced back to the statutory language that granted the CFPB its regulatory power over CRAs. This Note argues that complementary legislative action— while acknowledged, but not fully explored in the rule—should more thoroughly examine how existing state laws can help bridge the gap in the Bureau’s efforts to address medical debt and the burden that such debt has on consumers .
Commentary:
For bankruptcy practitioners, the insights from this article are particularly salient. The pervasive nature of medical debt means that many clients seeking bankruptcy relief are burdened by medical expenses. Understanding the nuances of how medical debt is incurred and collected can inform more effective advocacy and representation.
Moreover, the article's call for enhanced regulatory protections aligns with the need for systemic reforms to alleviate the medical debt crisis. Such reforms might reduce the number of individuals forced to file for bankruptcy due to insurmountable medical bills, but could also work in conjunction with bankruptcy to lessen the burdens of medical debt.
For example, following the 2024 enactment of the Healthcare Access and Stabilization Program (HASP) —by providing for the cancellation of eligible medical debts— there would seem to be an affirmative duty on medical systems to amend or withdraw Proofs of Claims filed in consumer bankruptcy cases and failing that there is a novel and promising avenue for objecting to medical Proofs of Claim in Chapter 13 cases. Below is a breakdown of how consumer debtor attorneys and Chapter 13 trustees (who have a duty to examine and object to claims) can utilize HASP to object to such claims, enhance plan feasibility, and increase dividends to other unsecured creditors.
While my firm has started to affirmatively look for these claims and seek forgiveness of medical debts under HASP, whether either medical creditors or Chapter 13 Trustees will meet their obligations and duties is an open question.
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