The Joe Biden administration has finalised a rule that bans medical debt from appearing on credit reports. In a “lifechanging” new rule announced Tuesday, the Consumer Financial Protection Bureau will remove an estimated $49 billion in unpaid medical bills from the credit reports of about 15 million Americans. The measure, which was proposed in June, will take effect 60 days after being published in the federal register.
Biden bans medical debt from credit reports, removes $49 billion in unpaid bills
Just days ahead of his exit, the president finalised the rule to “reduce the burden of medical debt.” “No one should be denied economic opportunity because they got sick or experienced a medical emergency,” Kamala Harris said in a statement released by the White House.
Tuesday's rule will ensure that patients are not denied access to credit home mortgages, car loans, or small business loans due to unpaid medical bills, according to the White House fact sheet. The vice president explained that the move came as part of the Biden-Harris administration's “overall plan to forgive $7 billion by 2026.”
“We also reduced the burden of medical debt by increasing pathways to forgiveness and cracking down on predatory debt collection tactics,” Harris went on. Calling the rule “lifechanging,” she stressed that this would allow financial relief to “millions of families.”
With the removal of unpaid medical bills, credit scores are expected to be raised by an estimated average of 20 points. “As someone who has spent my entire career fighting to protect consumers and lower medical bills, I know that our historic rule will help more Americans save money, build wealth, and thrive,” Harris added.
{{/usCountry}}With the removal of unpaid medical bills, credit scores are expected to be raised by an estimated average of 20 points. “As someone who has spent my entire career fighting to protect consumers and lower medical bills, I know that our historic rule will help more Americans save money, build wealth, and thrive,” Harris added.
{{/usCountry}}Rohit Chopra, the bureau’s director, echoed similar sentiments in a statement that reads, “People who get sick shouldn’t have their financial future upended. The CFPB’s final rule will close a special carveout that has allowed debt collectors to abuse the credit reporting system to coerce people into paying medical bills they may not even owe,” reported CNN.