Medical Bankruptcy Changes Proposed
Many people coping with unbearable medical debt turn to bankruptcy for help. If a Rhode Island senator has his way, even more relief will be available.
The Associated Press reports Rhode Island Senator Sheldon Whitehouse proposed a bill that will provide an exception to bankruptcy laws for those who file due to medical bills.
Called the Medical Fairness Act, if passed it will allow provide families struggling with medical debt:
- Protection for homes worth up to $250,000
- Extend bankruptcy protection to financially distressed caregivers of ill, injured or disabled family
- Allow bankruptcy filers to pay attorney fees when they are financially able to do so after filing.
The proposed legislation will also waive the Chapter 7 means test and credit counseling requirements. The means test is used to determine if a person is qualified to file for Chapter 7 bankruptcy. Chapter 7 allows the debtor to get rid of all their debt and start fresh.
The Medical Fairness Act will only apply to those who meet the definition of medical debtors.
Republican Senator Jeff Sessions of Alabama disagrees with the provision of the bill eliminating the means test. The fear is that people who have gone bankrupt only partly due to medical bills could file as medical debtors and receive the “special treatment.”
But there are many out there who hope the bill passes. Elizabeth Edwards, the wife of the former Senator and presidential candidate John Edwards, supports the proposed bill. She claims it could give medical debtors “a less burdensome, less catastrophic bankruptcy option that recognizes the unique circumstances that have driven them to bankruptcy.”
Kerry Burns attended the Senate Judiciary subcommittee hearing to plead senators to support this legislation. Despite having insurance, she lost her savings and retirement funds after her young son was diagnosed with cystic fibrosis.
She and her husband spent a lot of time in the intensive care unit with their son. They each missed a lot of work and shortly after, they weren’t able to keep up with their mortgage payments and other bills. Insurance covered most of the $5 million in medical expenses for their son, but they were still forced to file bankruptcy.
At this point the proposed bill is still in the legislative process. It must be reviewed and revised by committees before it can move on to the next step of debate.