The Trump administration’s Consumer Financial Protection Bureau (CFPB) issued guidance yesterday prohibiting states from wiping medical debt from consumers’ credit ratings.

The guidance deems that federal law overrides any state law that limits the inclusion of medical debt on individuals’ credit reports. The move could exacerbate the crippling effects of skyrocketing medical costs and hand financial industry groups a potential assist in their ongoing lawsuits to block these state-level protections.

Despite the fact that more than 90 percent of Americans have health insurance, medical debt in the United States has risen to an estimated $220 billion, larger than the entire economies of many states and impacting around 100 million Americans. Many of these individuals live in the South or low-income communities, and fifteen million of them have these medical bills listed on their credit reports. Financial institutions use this debt to cut consumers out of the financial system by claiming they’re too unreliable to receive a loan or other financial assistance.

Currently fifteen states, including California, Colorado, Maine, and Delaware, have introduced legislation to limit medical debt reporting and protect consumers. However, the Trump administration is now actively trying to quash these laws, said Chi Chi Wu, an attorney at the National Consumer Law Center, an organization that fights for economic justice for low-income and other vulnerable communities.

The guidance is “trying to invalidate [state] protections that don’t cost anything to anyone,” said Wu. “It’s not just taking a hands-off approach and saying, ‘We won’t protect consumers,’ it’s saying, ‘We are going to actively harm you.’”

Under President Joe Biden’s administration, the Consumer Financial Protection Bureau, a watchdog agency founded in the wake of the 2008 financial crisis, instituted a rule that would have removed an estimated $49 billion in medical debt from individuals’ credit reports. However, the rule was immediately challenged by the financial industry, and a federal judge blocked it from going into effect earlier this year. The Trump administration refused to challenge that judge’s decision, allowing the rule to be vacated.

Under Trump, the CFPB then gave another green light to predatory practices by revoking Biden-era legal guidance warning medical debt collectors that many of their practices, like “upcoding” for services that weren’t delivered, ran afoul of federal laws. In one notable instance cited by the bureau, a predatory debt collector repossessed an Iraq War veteran’s prosthetic limbs because he was late paying down his medical bill.

These regulatory rollbacks set the stage for the new legal guidance this week, bringing the administration’s legal assault to state-level consumer protections.

The guidance lays out the Consumer Financial Protection Bureau’s current legal interpretation of the Fair Credit Reporting Act, a federal law passed in 1970 that established certain privacy regulations for consumer information collected by credit reporting agencies. The bureau — which is being dismantled by the Trump administration — claims that when Congress passed the law, it intended to preempt state laws on the matter, an argument disputed by many legal experts.

The guidance, however, is not legally binding and, in fact, may be disregarded entirely by courts after a recent landmark Supreme Court ruling, Loper Bright Enterprises v. Raimondo, stripped administrative authority to interpret laws passed by Congress.

Still, the guidance is being cited by industry groups to advance their ongoing litigation to overturn the fifteen state laws. For example, the Consumer Data Industry Association, which represents credit reporting companies like Equifax, Experian, and TransUnion, is likewise arguing that federal laws void state-level regulations of their conduct as part of their effort to block Maine’s medical debt law.

“Whether [the federal guidance is] successful or not is going to be up to the court. This is not a legally binding opinion,” said Wu. “I would hope that courts aren’t persuaded by it.”