Medical Bankruptcy Fairness Act of 2026
Sponsored By: Senator Whitehouse, Sheldon [D-RI]
Introduced
Summary
Creates clearer bankruptcy protections for people with large medical bills. This bill would define a new "medically distressed debtor" category and change exemptions, procedures, and credit reporting to help people overwhelmed by medical costs.
Show full summary
- Families and patients: It defines medical debt and a "medically distressed debtor" as someone who in the prior 3 years had unpaid medical bills exceeding the lesser of 10 percent of adjusted gross income or $10,000. The definition also covers spouses and certain health-related employment or support issues.
- Property and process relief: Medically distressed debtors could elect larger property exemptions for a residence, cooperative housing used as a residence, or a burial plot, up to $250,000. The bill also waives a Chapter 7 administrative requirement and changes Chapter 13 plan confirmation rules for these debtors.
- Credit and other protections: Debtors must file a sworn statement of medical expenses. The bill adds medically distressed status to student loan undue hardship consideration, expands credit counseling rules to include these debtors, and excludes medically distressed bankruptcies from consumer credit reports.
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Bill Overview
Analyzed Economic Effects
6 provisions identified: 5 benefits, 0 costs, 1 mixed.
Who counts as medically distressed
This bill would define "medical debt" and create a new "medically distressed debtor" test. You would qualify if, in the three years before filing, unpaid medical bills for you or covered relatives exceeded the lesser of 10% of your adjusted gross income or $10,000. You could also qualify if you missed at least $10,000 in domestic support because of a medical issue or if you lost or reduced work due to illness, caregiving, or a declared public-health emergency. The definition and tests would be used to decide who gets the bill's special bankruptcy rules.
Keep more home equity in bankruptcy
This bill would let a medically distressed debtor elect a larger exemption for certain property. You would be able to exempt up to $250,000 of your aggregate interest in a residence, certain cooperative housing used as a home, or a burial plot. In some cases you must choose this $250,000 election instead of other listed exemptions, and for some property it applies only when the state exemption is less than $250,000.
Student loans and medical distress
This bill would make medically distressed debtor status an explicit factor in the student loan nondischarge rules. If you are a medically distressed debtor with student loans, courts would be able to consider that status when deciding whether your student loans can be discharged in bankruptcy. That could make it easier for qualifying filers to get relief on some student loan debt.
Bankruptcy process changes for filers
If you qualify as a medically distressed debtor, the bill would say the Chapter 7 means test does not apply to your case. Judges confirming Chapter 13 plans would also consider your medically distressed status when approving plans. At the same time, you would need to take the required credit counseling if you claim that status. You would also have to file a sworn statement of your medical expenses and state under penalty of perjury that those expenses were not incurred just to meet the test.
Hide medical bankruptcies from credit reports
This bill would require credit reporting agencies to exclude any information related to the bankruptcy of a medically distressed debtor from consumer reports. If you qualify, your bankruptcy tied to medical distress would not appear on your credit report under the amended rule. That could help qualifying filers get credit or lower rates after bankruptcy.
When these changes would apply
The bill would take effect on the date it is enacted. Its amendments would apply only to bankruptcy cases that start on or after that date. Cases that began before enactment would follow the old rules.
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