Senator Sheldon Whitehouse (D-RI) is sponsoring a Senate Bill, along with Co-Sponsors Senator Elizabeth Warren (D-MA) and Senator Richard Durbin (D-IL) to amend the U.S. Bankruptcy Code to allow certain types of debtors to have higher exemption amounts and discharge student loans. The proposed date that the Act will take effect is the date of enactment of the Act.
The name for the proposed amendment is the “Medical Bankruptcy Fairness Act of 2014.” It states that ‘medical debt’ is any debt incurred voluntarily or involuntarily as a result of the diagnosis, cure, mitigation, or treatment of injury, deformity, or disease of an individual, or for services performed by a medical professional in the prevention of disease or illness of an individual.
The proposed Bill states that a ‘medically distressed debtor’ is a debtor who, during the 3 years before the date of the filing of the petition, incurred or paid aggregate medical debts for the debtor, a dependent of the debtor, or a nondependent parent, grandparent, sibling, child, grandchild, or spouse of the debtor that were not paid by any third-party payor and were greater than the less of either 10 percent of the debtors gross income or $10,000.
A ‘medically distressed debtor’ may also be someone who did not receive domestic support obligations, or had a spouse or dependent who did not receive domestic support obligations of at least $10,000 due to a medical issue of the person obligated to pay medical debts.
A ‘medically distressed debtor’ may also be someone who experienced a change in employment status that resulted in the reduction of wages, salaries, commission, or work hours or resulted in unemployment due to an injury, deformity, or disease of the debtor, or the care for an injured, deformed, or ill dependent or nondependent parent, grandparent, sibling, child, grandchild, or spouse of the debtor.
We do not know if this proposed legislation will find sufficient support for its eventual passage, but keep reading our blog posts for updates on the progress of this proposed Amendment.
For more information, be sure to consult with skilled bankruptcy counsel.
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