Medical debt news update, plus an announcement!

Hey there.

We’ve got a couple quick updates for you this week.

First: some developments in a story we’ve been following since February about medical debt, credit reporting, and the Consumer Financial Protection Bureau.

And then we’ll share a little announcement about what we’ve been up to — a work in progress that we’re really psyched about.

Medical debt and credit reports

Last week, a federal judge overturned a federal rule that would have barred medical debt from appearing on credit reports.

AND… the judge ruled that federal law preempts more than 10 states with their own bans on medical debt credit reporting. Wow.

An estimated 15 million people would have benefited from the federal rule, lifting credit scores an average of 20 points, according to the Consumer Financial Protection Bureau, which finalized the rule in January, before Biden left office.

As we reported earlier this year, the Trump administration effectively shut down the CFPB in February, sidelining the biggest watchdog on medical debt collections and credit reporting.

Now the AP reports that, despite legal action to halt mass firings and cancelled contracts at the agency, it remains effectively toothless.

“CFPB employees say they essentially spend the workday sitting on their hands, forbidden from doing any work by directive from the White House.”

It’s a big loss. In February, when the agency first got taken offline, credit counselor Lara Ceccarelli told us that she had relied on being able to refer clients to the CFPB when it sounded like a debt collector was violating their rights.

“It makes a difference feeling like you’ve got a powerhouse at your back,” she said. “And I can’t say that anymore.”

It’s a lot to take in.

Where this leaves us

For now at least, some protections remain intact: medical debts less than $500 shouldn’t appear on your credit report. Nor should debts less than one year old. That’s thanks to voluntary changes made by credit bureaus in 2022.

If you owe a medical debt, check out our three-part newsletter series on our rights and options when dealing with bill collectors. (Here’s Part 1, Part 2, and Part 3).

And the legal battle over the federal rule may not be over. Chi Chi Wu, an attorney with the National Consumer Law Center, told Bloomberg Law they were “disappointed in the ruling,” and evaluating their next steps.

Here at An Arm and a Leg, we’re disappointed too, and looking for ways to find encouragement ourselves.

As tough as these battles are, there are folks out there working to help, and strategies for fighting back.

We’re gonna keep lifting them up.

Psst… our new website is here!

It’s still a work in progress, but allow us to introduce you to our brand new website!

We built it to make our work easier to find, with everything — including this newsletter’s archive — in one place.

And there’s a new feature we’re really jazzed about: Starter Packs. Little collections of our best episodes and newsletters around specific topics — like ‘Help! I’m stuck with a giant medical bill.’

We’ve launched with just three, but we’re gonna add a bunch more, and we’d love your suggestions for what the next ones should be.

Speaking of your suggestions: A few weeks back, we asked you whether you thought we should move this newsletter off of Substack and onto our new site.

The response was a resounding hell-yeah, so that’s just what we’re doing!

Starting in a few weeks, we’ll be sending this newsletter from a new domain: armandalegshow.com. (You don’t have to do anything. If you’re subscribed here, we’ll make sure you keep getting it.)

Click around and let us know what you think.

Not to get too punny here, but we think it’s a “site” to see.

— Claire