Medical Bankruptcy Fairness Act of 2026
Sponsored By: Senator Whitehouse, Sheldon [D-RI]
Introduced
Summary
This bill would create new _medical debt protections_ by defining a "medically distressed debtor" and changing bankruptcy rules for people hit by big medical bills. It would let qualifying debtors claim bigger home and burial-plot exemptions, skip some filing hurdles, and keep that bankruptcy out of consumer credit reports.
Show full summary
- Families and individuals with large medical bills: It sets a 3-year test that treats someone as "medically distressed" if unpaid medical debt exceeds the lesser of 10 percent of adjusted gross income or $10,000. Qualifying debtors can elect to protect up to $250,000 in home equity or similar residence property and burial plots.
- People filing Chapter 7 or Chapter 13: The bill would remove the Chapter 7 paragraph that triggers a means test for medically distressed debtors and add a Chapter 13 exception that can affect required repayment calculations.
- Borrowers, credit users, and counselors: Medically distressed filers would have to complete credit counseling and file a sworn statement of medical expenses. Their bankruptcies would be excluded from consumer credit reports and the law would broaden the undue hardship path for student loans to include medically distressed debtors.
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Bill Overview
Analyzed Economic Effects
8 provisions identified: 6 benefits, 2 costs, 0 mixed.
New medically distressed debtor definition
If enacted, the bill would add two definitions to the bankruptcy code. "Medical debt" would cover bills for diagnosis, treatment, prevention, and related services. A "medically distressed debtor" would be someone who, in the 3 years before filing, has unpaid medical debt greater than the lesser of 10% of their adjusted gross income or $10,000, or who meets alternative tests for unpaid domestic support or job loss for medical reasons. The rule would apply to cases filed on or after enactment.
Protect up to $250,000 home equity
If enacted, medically distressed debtors could choose a new exemption that protects up to $250,000 of their aggregate interest in certain residence-related property. Covered property includes a home or personal property used as a residence, a housing cooperative unit used as a residence, and a burial plot. The choice can replace a smaller state exemption and applies to cases filed on or after enactment.
Medical bankruptcies removed from credit reports
If enacted, the bill would require consumer reporting agencies to exclude any information related to the bankruptcy of a medically distressed debtor from credit reports. The exclusion would apply to bankruptcies filed on or after enactment. This would remove those filings from credit files for qualifying debtors.
Medically distressed helps Chapter 13 plans
If enacted, being a medically distressed debtor would be an explicit alternative that can satisfy Chapter 13 plan-confirmation rules when the trustee or an unsecured creditor objects. This could make it easier for qualifying filers to confirm plans and keep assets like a home. The change would apply to cases filed on or after enactment.
Student loans discharge for medical distress
If enacted, the bill would make medically distressed status an explicit basis to use the undue-hardship exception to discharge certain student loan debts in bankruptcy. The change would apply to cases filed on or after enactment. Qualifying debtors could seek discharge under the amended rule.
Fewer Chapter 7 rules for medical debtors
If enacted, a specified administrative paragraph in Chapter 7 would not apply when the debtor is a medically distressed debtor. That removes a procedural requirement for qualifying Chapter 7 filers. The change applies to cases filed on or after enactment.
Credit counseling for medical filers
If enacted, the bill would make existing credit counseling rules explicitly apply to medically distressed debtors. You would need to complete any required counseling before filing for bankruptcy. The change applies to cases filed on or after enactment.
Sworn medical expense statement required
If enacted, a debtor who seeks medically distressed relief would have to file a statement listing medical expenses used to prove distress. The debtor would also have to swear under penalty of perjury that the expenses were not incurred to qualify. The rule applies to cases filed on or after enactment.
Sponsors & CoSponsors
Sponsor
Whitehouse, Sheldon [D-RI]
RI • D
Cosponsors
Sen. Blumenthal, Richard [D-CT]
CT • D
Sponsored 7/14/2026
Sen. Booker, Cory A. [D-NJ]
NJ • D
Sponsored 7/14/2026
Sen. Baldwin, Tammy [D-WI]
WI • D
Sponsored 7/14/2026
Sen. Welch, Peter [D-VT]
VT • D
Sponsored 7/14/2026
Sen. Warren, Elizabeth [D-MA]
MA • D
Sponsored 7/14/2026
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov