Durbin Introduces Medical Bankruptcy Fairness Act

For those with significant medical debt, bill would improve the bankruptcy process, forgive student loans, and allow families to keep their homes

WASHINGTON – U.S. Senators Dick Durbin (D-IL), Sheldon Whitehouse (D-RI), and Elizabeth Warren (D-MA) have introduced legislation to help Americans burdened by the costs of illness or injury.  The Medical Bankruptcy Fairness Act of 2016 would make the bankruptcy process more forgiving for those driven to insolvency by health care-related debt or loss of income.
“Nobody should ever have to choose between their physical health and their financial health, yet far too many Americans are driven into bankruptcy when they or their loved ones are ill,” said Durbin. “I’m pleased to join my colleagues in introducing this bill, which would provide important safeguards for those bankrupted by medical issues outside of their control.”

The Medical Bankruptcy Fairness Act would offer a more tailored bankruptcy process for individuals with large medical bills or who lose income due to an illness or injury or to care for a family member.  It would also cover people who lose alimony or child support due to the medical condition of the person responsible to pay.  For these “medical debtors,” the bill would:
·         Waive procedural hurdles, such as credit counseling requirements, that make little sense for those driven to bankruptcy by medical issues;
·         Allow for the forgiveness of student loan debt, which is currently prohibited in bankruptcy for all debtors; and
·         Help families keep their homes by allowing them to maintain at least $250,000 in property.
Out-of-pocket medical costs—like deductibles, doctor’s office co-pays, and prescription drugs—pushed more than 11 million Americans below the poverty line in 2015, according to the U.S. Census Bureau.