Credit Industry Sues Over Biden's Medical Debt Rule

Two groups from the credit reporting and credit union industries have filed a lawsuit against a new rule by U.S. President Joe Biden, which bans the inclusion of medical debt in credit reports. The lawsuit argues that the rule violates the Fair Credit Reporting Act.

Two influential groups, representing credit reporting and credit unions, have launched a lawsuit against a new U.S. regulation that prevents the inclusion of medical debt in consumer credit reports. This legal challenge was filed shortly after the rule's adoption by President Biden's administration.

The Consumer Data Industry Association and Cornerstone Credit Union League submitted the suit in Sherman, Texas federal court. This action follows the U.S. Consumer Financial Protection Bureau's finalization of the regulation that will remove $49 billion in medical debts from approximately 15 million Americans' credit reports. Pushback had come from Republicans demanding a halt in new financial regulations as President-elect Donald Trump readies to assume office.

The industry's stance is that the rule conflicts with the Fair Credit Reporting Act, a viewpoint shared by the lawsuit's text. The court case, overseen by U.S. District Judge Sean Jordan, underscores the potential implications for lending decisions, consumer credit scores, and the issuance of low-cost mortgages in the future.

(With inputs from agencies.)