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Is relief on the way for ‘medical debtors’?

Sheldon Whitehouse
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This week, the Senate Judiciary Administrative Oversight and The Courts Subcommittee held a hearing on the Medical Bankruptcy Fairness Act of 2009 (S. 1624), which is a new bill geared toward making it easier for people with medical debt to file for bankruptcy, by removing some of the current burdens from those debtors.

The hearing begun with a debate over a Harvard study showing that 60% of bankruptcy filers filed for bankruptcy at least in part because of medical debt. This debate focused on the legitimacy of the study’s methodology and whether there are actually more medical debts now than a decade ago.

Of course, the debate quickly evolved – or devolved – into a debate on the legitimacy of health care reform in America.

Which is ironic, given that the bill’s existence seems to make the point that if we can’t have thorough health care reform (and it looks unlikely from where I’m sitting), then let’s at least make it easier for people who are overburdened with medical debt to discharge their debt in bankruptcy. If the U.S. passed a good health care reform bill that worked, this medical bankruptcy bill would probably be unnecessary because medical debts would not be as prevalent and/or as burdensome as they are for people today.

Specifically, the bill would remove the credit counseling requirement for medical debtors; would enable these debtors to exempt up to $250,000 in value of their real or personal property from the bankruptcy estate (so that property up to that value would not be sold by the trustee); and would make attorney’s fees incurred as the result of the medical bankruptcy non-dischargeable by the bankruptcy so that debtors could take more time paying off those fees. The term “medical debt” is fairly broad, meant to include debt incurred directly or indirectly as a result of a medical condition.

I’ll place a widget on the sidebar of the blog to help keep track of this interesting piece of legislation.

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One Response to Is relief on the way for ‘medical debtors’?
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