A new Consumer Financial Protection Bureau (CFPB) rule aimed at helping millions of Americans with medical debt has been derailed in court – with credit union industry groups playing a key role. Under the previous administration, the CFPB finalized a rule that would ban medical debt from credit reports, a change projected to benefit 15 million Americans and erase $49 billion in medical debt from credit histories. For people like 62-year-old David Deeds, a cancer patient whose credit score plummeted into the 500s after he accrued tens of thousands in medical bills, the rule “appeared like a lifeline” – offering hope that his decade of hard-won credit repair wouldn’t be undone by illness. “Once my financial troubles started, the situation just avalanched,” Deeds wrote, describing how quickly medical costs drove him toward financial ruin.

That lifeline, however, is now on hold. In a dramatic reversal under the new administration, CFPB leadership appointed by President Trump shifted the agency’s stance and joined forces with the plaintiffs – trade groups representing credit reporting companies and credit unions – who sued to block the medical debt rule. In late April, the CFPB and two industry groups (the Consumer Data Industry Association and the Cornerstone Credit Union League) filed a joint motion asking a Texas court to vacate the rule entirely, arguing the agency had overstepped its authority. The federal judge promptly halted the rule, which had been set to take effect March 15 and was already delayed to July 28. A final decision on striking down the rule is expected by mid-June, and the CFPB has ceased defending its own regulation.

Consumer advocates warn that tossing out the medical debt rule would be a devastating setback for vulnerable borrowers. The National Consumer Law Center (NCLC) and other advocacy groups have intervened in the lawsuit to champion the rule’s benefits for struggling families. They point out that the CFPB’s two-year rulemaking process included over 74,000 public comments – with major medical and patient organizations like the American Hospital Association and American Cancer Society supporting the change. “The prior version of the agency went through a tremendous amount of work and time to put the rule in place,” said NCLC attorney Jennifer Wagner, who argues the CFPB’s new leadership is trying to undo those protections without due process. As the court battle continues, millions of Americans remain in credit-score limbo, waiting to see if medical debt will continue to haunt their financial lives or if relief will arrive only to be snatched away at the last moment.