The federal Consumer Financial Protection Bureau has taken main steps to assist folks with medical debt in its practically 14-year historical past. It issued guidelines barring medical debt from Individuals’ credit score reviews and went after debt collectors who pressured clients to pay bills they didn’t owe. However in early February, the Trump administration moved to successfully shutter the company.
“An Arm and a Leg” host Dan Weissmann talks with credit score counselor Lara Ceccarelli about how the CFPB has helped shoppers on the nonprofit the place she works, and the way she’s navigating the sudden change.
Client rights advocate Chi Chi Wu, an lawyer on the Nationwide Client Legislation Heart, describes the court docket battle she and her colleagues are mounting to decelerate the company’s dismantling, and the place issues may go from right here.
Dan Weissmann
Host and producer of “An Arm and a Leg.” Beforehand, Dan was a employees reporter for Market and Chicago’s WBEZ. His work additionally seems on All Issues Thought of, Market, the BBC, 99 % Invisible, and Reveal, from the Heart for Investigative Reporting.
Credit
Emily Pisacreta
Producer
Claire Davenport
Producer
Adam Raymonda
Audio wizard
Afi Yellow-Duk
Editor
Click on to open the Transcript
Transcript: Medical-Debt Watchdog Will get Sidelined by the New Administration
Be aware: “An Arm and a Leg” makes use of speech-recognition software program to generate transcripts, which can comprise errors. Please use the transcript as a instrument however verify the corresponding audio earlier than quoting the podcast.
Transcript: A medical-debt watchdog will get sidelined by the brand new administration
Dan: Hey there–
Lara Ceccarelli works for American Monetary Options. That’s a non-profit credit score counseling company.
Lara spends her days speaking with individuals who have payments they’ll’t pay, debt collectors chasing them, together with for medical payments.
On a current Sunday evening, Lara was winding down her day the best way she often does.
Lara: I are inclined to learn the information earlier than mattress. I often discover that it offers me much less nervousness, uh, when I’ve a transparent image of, , what’s taking place on the earth and I don’t really feel like I’m at the hours of darkness. And yeah, that Sunday was an exception.
Dan: That Sunday was February 9, and that night huge information had damaged concerning the Client Monetary Safety Bureau– C F P B, for brief.
A federal company that’s principally a watchdog for shopper rights of every kind.
So, for years, at any time when Lara’s talked to a consumer, and it appears like a debt collector is violating their rights — which occurs rather a lot– she has referred the consumer to the CFPB. And it has labored.
Lara: They’ve created these streamlined processes the place shoppers can submit complaints and see enforcement motion taken instantly.
Dan: However that Sunday evening, February 9, information broke that an official President Donald Trump had put in command of the CFPB was principally shutting the company down. Efficient instantly.
Company employees had gotten a memo telling them to — cease working.
Lara: I felt my abdomen sink by way of the ground. And my poor husband is lively responsibility within the army, so he was getting ready for a really lengthy day the subsequent day on his Navy ship, and he took one take a look at me and knew one thing was badly unsuitable,
Dan: What did your husband say?
Lara: He tried to inform me that it was all going to be okay. I believe he was, uh, doing his finest to be as supportive as he may.
Dan: How late have been you up that evening?
Lara: Oh, I didn’t sleep. I believe I acquired possibly one or two hours of sleep. I Lay down and I, uh, checked out my terrible popcorn ceiling and tried to sleep and simply couldn’t shut my mind off.
Dan: She was eager about how necessary the CFPB has been– what number of shoppers she’s referred to them.
I talked with Lara simply over per week after that Sunday evening. We’ll hear how she managed that first week, how she began shifting what she tells shoppers– what different assets she’s nonetheless referring them to.
And we’ll hear a few court docket case that has slowed down the Trump administration’s efforts to utterly dismantle the CFPB. And the place issues COULD go from right here.
However first, we should always speak about why the CFPB has been such a giant deal, particularly for folks with medical money owed.
That is An Arm and a Leg, a present about why well being care prices so freaking a lot, and what we will possibly do about it. I’m Dan Weissmann. I’m a reporter, and I like a problem. So the job we’ve chosen on this present is to take some of the enraging, terrifying, miserable components of American life–and convey you a present that’s entertaining, empowering and helpful.
We’re gonna hear about what the CFPB has performed about medical money owed from someone who’s been engaged on this situation for the reason that starting.
Chi Chi Wu: My identify is Chi Chi Wu. I’m a senior lawyer on the Nationwide Client Legislation Heart.
Dan: Really, she’s been at this since earlier than the start. Chi Chi Wu joined the Nationwide Client Legislation Heart in 2001.
The Client Monetary Safety Bureau began out a half dozen years later, in 2007– as an thought. A proposal from a legislation professor named Elizabeth Warren. She thought monetary establishments wanted a watchdog– or as she known as it, “a cop on the beat.”
In 2008, monetary establishments crashed the financial system. Barack Obama grew to become president. In 2010 Congress handed a legislation to place some new restrictions on monetary establishments– the “Dodd Frank Wall Avenue Reform and Client Safety Act”– which mandated the CFPB’s creation.
Chi Chi Wu says it didn’t take lengthy for medical money owed to land within the company’s cross-hairs..
Chi Chi Wu: In 2014, the Client Monetary Safety Bureau did a examine that discovered, in case you take a look at the debt assortment gadgets on credit score reviews…
Dan: In different phrases,in case you ask: When folks get put in collections, what are the payments truly for?
Chi Chi Wu: …over half of them are for medical debt. Half. It was an enormous quantity.
Dan: In different phrases, a ton of individuals had awful credit score scores, not as a result of they’d taken a cruise they couldn’t pay for. However as a result of they’d gotten sick.
Chi Chi Wu: It was an enormous downside. Individuals would attempt to be shopping for a home or a automobile making an attempt to get a bank card they usually’d must pay extra and even get turned down .
Dan: And now it was on the document, because of the CFPB.
The following yr a bunch of state attorneys normal reached a “voluntary settlement” with the large three credit score bureaus — Equifax, Experian, TransUnion. The massive three agreed that, they’d wait 180 days — six months — earlier than placing a medical debt on someone’s credit score report.
Chi Chi Wu: So the concept was the patron would have six months to straighten out the debt with insurance coverage, determine what they really owed, possibly dispute it in the event that they didn’t suppose they owed it.
Dan: In the meantime, the CFPB was engaged on one other downside.
Chi Chi Wu: Typically folks would have gadgets on their credit score reviews, particularly for small greenback quantities that they by no means knew about till they went to purchase a automobile or refinance their home.
Dan: This was known as “parking,” and Chi Chi Wu says it was particularly widespread with medical money owed.
Chi Chi Wu: A debt collector would get a medical debt referred from a healthcare supplier they usually wouldn’t do something with it.
They wouldn’t ship a single letter. They wouldn’t make a single telephone name. All they might do is report that debt to the credit score bureaus and wait… would simply wait till the patron had to make use of their credit score rating for one thing, , refinance their mortgage, purchase a automobile…
Dan: Lease an house. Apply for a job…
Chi Chi Wu: Sure, sure, all of these. After which, their credit score would get pulled, this medical debt would present up. They usually’d be left scrambling as a result of they must clear that debt from their credit score report earlier than they might get that mortgage or automobile mortgage or job or house, and even when they have been like, ‘I paid that, or insurance coverage ought to have paid that,’ they didn’t have time to cope with it. As a result of in case you’re in the course of this huge necessary transaction, you don’t have time to attend 30 days for a credit score reporting dispute to be resolved. And infrequently it takes longer.
Dan: So, folks paid up. They didn’t have a alternative.
Chi Chi Wu: And the explanation debt collectors do that’s as a result of it’s low cost. It’s low cost to do credit score reporting. It’s costly to ship a letter as a result of it prices you, what’s the worth of a stamp proper now?
Dan: 73 cents! Plus no matter it prices you to print it out and stuff. A man who was a debt collector as soon as advised me sending a invoice prices two bucks.
Chi Chi Wu says the CFPB began engaged on a rule banning “parking” through the second Obama administration. And finalized the rule in 2020, underneath Donald Trump. It takes some time.
When Joe Biden grew to become President, he appointed a CFPB director who put further deal with medical money owed. The credit score bureaus acquired the concept they may be topic to some new guidelines on that subject, and volunteered to make some adjustments of their very own.
In Could 2022 they introduced: As an alternative of ready simply six months to place medical payments on credit score reviews, they have been gonna wait a full yr.
Chi Chi Wu: As a result of six months typically is just not sufficient to cope with an insurance coverage dispute, proper? I imply, typically it takes rather a lot longer. In order that they prolonged that to a yr after which they agreed to not report medical money owed underneath 500.
Dan: And that’s once I first talked with Lara Cecarelli for this present.
I used to be making an attempt to determine: Was it actually a giant deal? The money owed would nonetheless be on the books — collectors may nonetheless bug folks about them. And tons of money owed would keep on credit score reviews.
Lara advised me: YEP. That’s gonna be a giant deal.
After we talked this month, she advised me she may see the influence of the CFPB in her work daily.
Lara: We’ve seen an enormous lower within the variety of complaints from shoppers, or issue that buyers are having with medical debt. It’s nonetheless one thing that we see. However , I used to have at the very least one dialog about medical debt a day, often extra, and that’s not the case. You understand, I’m having a few conversations per week, possibly, about medical debt. So we’ve seen the influence.
Dan: And he or she may see extra on the horizon:
In January, earlier than the inauguration, the CFPB truly issued new guidelines about medical debt. Like we stated, credit score bureaus had already promised to take away every part beneath 5 hundred {dollars}.
Now, underneath the brand new guidelines, all medical money owed would come off. And lenders couldn’t take a look at medical money owed after they made lending choices.
The CFPB had deliberate to start out imposing these guidelines in March.
Now– on that Sunday night in February– Lara was seeing information: The entire company was shutting down. Over the subsequent few days, information retailers reported greater than 100 and fifty quick layoffs — and the cancellation of greater than $100 million in contracts. And rumors of a lot deeper cuts to return.
Lara began doing this job through the first Tump administration. She says, this sweeping change is not only a swing of the pendulum again to how issues have been then.
Lara: No, that is new territory. They have been nonetheless sturdy, they have been nonetheless aware of consumer complaints. The enforcement and the safety was nonetheless there,
Dan: For proper now, it’s gone. Arising: What the primary CFPB-free week was like for Lara and her colleagues. What she’s telling shoppers now. And what Chi Chi Wu and her colleagues are doing.
An Arm and a Leg is a co-production of Public Street Productions and KFF Well being Information — that’s a nonprofit newsroom overlaying well being points in America. KFF’s reporters do superb work. We’re honored to work with them.
Lara Ceccarelli says she’s needed to revise what she’s used to telling shoppers. As a result of referring folks to the CFPB was a reasonably common a part of herday to day works.
Lara: It makes a distinction feeling such as you’ve acquired a powerhouse at your again. You say, , the CFPB is extremely strong, they are going to assist assist you. You understand, all you must do is attain out. They’re communicative, and they’re sturdy, and I can’t say that anymore.
Dan: There’s nonetheless an internet site. There’s nonetheless a telephone quantity.
Lara: However you’re not getting an individual proper now. You’re getting voicemails. So at this level, we’re nonetheless advising shoppers that the CFPB is, , an necessary company However we’re additionally informing them that proper now the CFPB is principally going darkish,
Dan: So, she’s telling folks: Hey, it’s value calling the CFPB, simply in case someone picks up. However in the meantime listed below are another locations to name.
Lara: I had a consumer who had been threatened by a debt collector, and the debt that they’re amassing on is definitely outdoors of the statute of limitations. It’s not collectible anymore. However they’re being harassed principally, , calling them in any respect hours of the day and evening and advising them that, , they’re nonetheless topic to authorized motion, none of which is true.
Dan: Which suggests, Lara tells me, that collector is breaking a legislation known as the Truthful Debt Assortment Practices Act.
Lara: And usually I’d have despatched that consumer within the course of the CFPB.
Dan: Usually, you file a criticism with the CFPB, the corporate responds to you inside 15 days, in response to the company’s web site.
Lara says firms listen– as a result of the CFPB has a giant stick. In 2023, the company shut down one medical-debt assortment firm for violating this very legislation.
That model of regular is gone for now. However Lara occurs to know, the Federal Commerce Fee — which continues to be up and working– additionally has authority to implement that legislation. They’re not specialists, however they’ve acquired somebody to reply the telephones. So she inspired her consumer to strive them.
Other people, she’s referring to their state lawyer normal’s workplace. In numerous states, consumer-protection is a giant a part of the state AG’s job. Some state’s have impartial shopper safety bureaus.
Lara and her colleagues respect the work they do.
Nevertheless it’s not the identical as having a strong, nationwide company that enforces federal legislation.
Lara: You understand, it wasn’t one thing the place someone in Ohio has a unique algorithm from someone in California so far as the place you go and who you contacted. Centralized enforcement and made it very easy for everyone to know the place to go to get assist with their explicit situation. All these different completely different locations, can form of take up a chunk of the enforcement motion , however none of them have that very same sturdy energy that the CFPB had, or the direct focus particularly on monetary establishments and and their interactions with shoppers instantly.
Dan: Lara and her colleagues are nonetheless there. She says their funding comes from non-public organizations, not the feds.
Lara: We’re not fearful concerning the lights going out right here but
All of us tried to raise one another up and, , speak concerning the different assets that we now have obtainable, all of that are beneficial. and we now have to, , keep some extent of equilibrium, once you’re talking to shoppers that, , one among you might have a breakdown at a time, proper?
And that’s by no means our flip. So, um, , you must keep some extent of optimism and positivity, as a result of in case you’re not optimistic and optimistic, for his or her outcomes. How can they probably suppose there’s hope for the long run?
Dan: Lara says she’s doing her finest at work– and dealing on maintaining her stability.
Lara: I’ve acquired a ravishing little paint mare that I experience um, and I get to exit and play along with her at any time when the, uh, information will get too bleak. Usually, she will get, uh, one or two days with out, , having to place up with me, however proper now the necessity is dire.
Dan: In the meantime, Chi Chi Wu is combating. On two fronts.
I discussed earlier: Biden’s CFPB took a giant parting shot in early January. The company finalized a rule banning medical money owed from credit score reviews.
That rule acquired hit instantly with lawsuits from ACA Worldwide — that’s the business affiliation for debt collectors — and the credit score bureaus.
Chi Chi Wu and her colleagues on the Nationwide Client Legislation Heart figured: The Trump Administration may not defend these lawsuits.
In order that they began getting ready motions to intervene: principally asking the court docket’s permission to take over the protection. On the Sunday night when Lara Ceccarelli learn concerning the CFPB shutdown on the information, Chi Chi Wu was not watching the information.
Chi Chi Wu: I had been working like a mad girl that weekend
Dan: Drafting paperwork for that movement to intervene.
Chi Chi Wu: So I used to be type of busy all weekend, writing, not watching the Tremendous Bowl
Dan: She acquired phrase from colleagues that Trump’s folks had shut down the CFPB, and he or she was like, “OK. That going into this doc I’m writing..”
Chi Chi Wu: …As a result of that was extra assist saying, nicely, the, this new CFPB is just not going to defend this rule and so you need to allow us to defend the rule.
Dan: Allow us to — the NCLC — defend the rule in court docket.
So OK, that was materials for her struggle on one entrance. However after all it opens up one other entrance, one other authorized battle.
On this one, NCLC is definitely a plaintiff — together with a union representing CFPB staff, and a pair different non earnings. On February 13– 4 days after the CFPB went darkish — they requested a federal decide, principally to cease the CFPB shutdown.
The following day, the decide issued a brief order, telling the CFPB to carry off on three issues:
One. No extra mass firings.
Two: Don’t destroy information — or take information down from public web sites.
And three: Don’t return cash to congress.
That order lasts simply over two weeks, then there’s a listening to scheduled. That’s taking place just a few days after we publish this episode, and we’ll be watching. .
The opposite lawsuit, concerning the CFPB’s rule on medical debt– it’s on a slower timetable.
In the meantime, Chi Chi Wu says there are different fronts to struggle on, and never only for her.
Chi Chi Wu: That is the place states can step in and defend the shoppers of their state. 9 states have already banned medical debt from credit score reviews. New York, Colorado, California, Rhode Island, even Virginia — a purple state. And so, in case your listeners are questioning what can they do — I imply, , clearly contact their members of Congress to assist the CFPB — but additionally, , if they’re in a state that doesn’t have one among these legal guidelines, they’ll attempt to get their state legislatures to go a legislation to guard them from medical money owed on credit score reviews.
Dan: We’re gonna do our greatest to remain on high of this story.A number of days after we publish this episode, there’ll be that listening to in federal court docket on the lawsuit opposing the CFPB’s shutdown.
I’ll put up updates on the social networking website BlueSky — it’s type of a Twitter substitute, and you could find me there at danweissmann (spelled with two esses and two enns)
Subsequent week’s First Assist Package e-newsletter will embrace a roundup of what we all know, and what assets are obtainable. Should you’re not signed up for First Assist Package but, simply head to arm and a leg present, dot com, slash, first help equipment.
And we’ll be again in just a few weeks, with an episode about one listener’s struggle — profitable struggle — in opposition to a six thousand greenback cost.
Megan: I didn’t must be an knowledgeable on this. I simply wanted to have entry to the instruments and the podcast would remind me of them. So I used to be like, okay, I’m so assured that I don’t owe this and so that might get me, like, actually amped up and indignant about it.
Until then, maintain your self.
This episode of An Arm and a Leg was produced by me, Dan Weissmann, with
assist from Emily Pisacreta and Claire Davenport — and edited by Afi Yellow-Duke.
Ellen Weiss is our sequence editor.
Adam Raymonda is our audio wizard.
Our music is by Dave Weiner and Blue Dot Periods.
Bea Bosco is our consulting director of operations.
Lynne Johnson is our operations supervisor.
An Arm and a Leg is produced in partnership with KFF Well being Information. That’s a nationwide newsroom producing in-depth journalism about well being points in America — and a core program at KFF: an impartial supply of well being coverage analysis, polling, and journalism.
Zach Dyer is senior audio producer at KFF Well being Information. He’s editorial liaison to this present.
And due to the Institute for Nonprofit Information for serving as our fiscal sponsor.
They permit us to simply accept tax-exempt donations. You’ll be able to be taught extra about INN at
INN.org.
Lastly, thanks to all people who helps this present financially.
You’ll be able to take part any time at: https://armandalegshow.com/support/
Thanks! And thanks for listening.
“An Arm and a Leg” is a co-production of KFF Well being Information and Public Street Productions.
To be in contact with “An Arm and a Leg,” subscribe to its newsletters. You can too observe the present on Facebook and the social platform X. And in case you’ve acquired tales to inform concerning the well being care system, the producers would love to hear from you.
To listen to all KFF Well being Information podcasts, click here.
And subscribe to “An Arm and a Leg” on Spotify, Apple Podcasts, Pocket Casts, or wherever you hearken to podcasts.
