August 6, 2009

New Legislation Would Help Families Struggling with Medical Debt

Bill Would Permit Families to Keep Their Homes after Bankruptcy

Washington, D.C. – As our economy continues working toward sustained recovery, U.S. Senator Sheldon Whitehouse (D-RI) today introduced legislation to help the many American families burdened by the costs of illness and injury. The Medical Bankruptcy Fairness Act (MBFA) of 2009 would assist individuals and families who are driven to bankruptcy by high medical costs by eliminating some of the procedural hurdles of the bankruptcy process.

“Families in Rhode Island and throughout the country are forced to file for bankruptcy every year by out-of-control medical expenses,” said Whitehouse. “As we work to fix the larger problems with our broken health care system, it’s equally important that we help those already struggling under the oppressive weight of medical expenses.”

The MBFA would allow the retention of at least $250,000 of home value through the bankruptcy process, helping families incurring high medical bills to keep their homes. It would also remove credit counseling requirements that are unnecessary when the cause of bankruptcy is not poor financial management but a medical crisis, and waive the so-called “means test,” making the filing process quicker and less costly. This provision would also help ensure that people have the ability to file to have their debts discharged in Chapter 7, the most efficient and simplest bankruptcy process available.

A number of Rhode Islanders have written to Whitehouse to share stories about financially crippling medical costs. Adam, a 23-year old from Bristol, accumulated $20,000 of medical debt after surgery to remove cancer. Robert, a retiree from Warwick, had to sell his home after debts mounted following a heart attack. Whitehouse today urged his Senate colleagues to support the MBFA and give “Adam and Robert and the millions like them nationwide a clean start in bankruptcy.”

An estimated 3.8 million individuals will be involved in a personal bankruptcy filing in 2009. A recent Harvard study found that illness and medical bills were linked to over 62% of personal bankruptcy filings in 2007.


Press Contact

Meaghan McCabe, (202) 224-2921