In case you weren’t aware, Congress is currently considering a bill called the “Medical Bankruptcy Fairness Act of 2009.”
If this bill passes, it will hopefully do the following for “medically distressed debtors”:
1. Waive the means test
2. Waive the credit counseling requirement
3. Create a larger homestead exemption to help more people keep their homes.
Recent Senate hearings included testimony by Elizabeth Edwards (wife of former Sen. John Edwards) as well as a woman named Kerry Burns who lost her home because her son’s cystic fibrosis required multiple surgeries that insurance didn’t cover because of “gaps.” As a result, the Burns family lost their home.
Sen. Sheldon Whitehouse (D-RI) is supporting the bill. Sen. Jeff Sessions (R-AL), however, is opposing it claiming that it invites fiscal irresponsibility. The opposition also brought in someone from the American Enterprise Institute (a think tank in DC) whose argument was essentially that everyone should just wait for the economic recovery to solve all of these problems.
It’s unfortunate that legislation like this even needs to be passed. But that’s what happens when you start off with a horribly written (i.e., the 2005 Bankruptcy Law).
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The Senate Judiciary Committee has announced a November 5th markup on the Medical Bankruptcy Fairness Act of 2009 (S.1624), a bill:
Amending federal bankruptcy law to cite circumstances under which a medically distressed debtor may elect to exempt from the property of the estate in bankruptcy up to $250,000 of the debtor’s aggregate interest in specified real or personal property that the debtor (or debtor’s dependent) uses as a residence, in a cooperative, or in a burial plot for the debtor or a dependent.
Revises requirements for dismissal or conversion of a Chapter 7 case to prohibit the court or specified parties in interest from filing a motion to dismiss or convert to Chapter 11 or 13 if the debtor is a medically distressed debtor.
Waives the credit counseling prerequisite for filing for relief from debt in the case of a medically distressed debtor.
Denies a discharge in bankruptcy from any debt incurred that relates to attorneys’ fees generated as a result of the debtor’s filing of a Chapter 7 petition.
Requires a debtor who seeks relief as a medically distressed debtor to attest in writing, and under penalty of perjury, that the medical expenses of the debtor are genuine, and not specifically incurred to bring the debtor within the coverage of the medical bankruptcy provisions of this Act.