You might have heard about this on social media or the news, but on January 7th, the Consumer Financial Protection Bureau (CFPB) made a big move. They finalized a rule to get medical bills off of credit reports. Here’s the scoop in simple terms:

What We Know:

• Medical Debt Ban: About $49 billion in medical debt will no longer appear on the credit reports of around 15 million people. That’s a lot of money!
• When It Starts: This rule will kick in 60 days after it’s published in the Federal Register.
• Protecting Privacy: CFPB’s Director Rohit Chopra said this move will stop debt collectors from using credit reports to scare people into paying possibly wrong bills.
• Medical Debt and Credit: Studies have shown that having medical debt on your credit report doesn’t really show if you can pay back other loans. Plus, people often get bills that are wrong or should’ve been covered by insurance.
• Debt Still Exists: Just to be clear, this rule doesn’t mean your medical debt goes away; you still owe what you owe.
• Republican Concerns: Before this rule, House Republicans sent a letter to Chopra, saying this could mess up how loans are approved and might not be good for consumers or the economy.

What Might Happen Next:

• New President, New Rules? With Donald Trump becoming President again on January 20th, he might decide to undo this rule set by the Biden administration.
• More Mortgages: The CFPB thinks this could lead to around 22,000 more mortgage approvals every year.
• Regulation V Might Flip: If Trump reverses this, it wouldn’t affect the 2022 rules that already removed paid medical bills and bills under $500 from credit reports.
• Credit Score Boost: If this rule sticks, people with medical debt could see their credit scores go up by about 20 points.

So, What Now?

I know this is a lot to take in, especially on a Friday, but it’s my job to keep you in the loop with the latest info. This change won’t happen overnight, and there’s still a lot of work to do for those with medical debt. Just like with the 2022 changes, there’s no ‘delete all’ button for credit reports.

If you run into clients with medical debt, send them our way. We’ll help make sure they know what to do whether this rule stays or goes.

I’ll keep you posted as things develop, especially after the inauguration. If you’ve got questions or if you know someone who could use some advice on this, feel free to reach out or send them over!