Medical Bankruptcy Fairness Act of 2021

II 117TH CONGRESS 1ST SESSION S. 146 To amend title 11, United States Code, to provide bankruptcy protections for medically distressed debtors, and for other purposes. IN THE SENATE OF THE UNITED STATES FEBRUARY 2, 2021 Mr. WHITEHOUSE (for himself, Mr. BROWN, Mr. BLUMENTHAL, Ms. BALD- WIN, and Ms. WARREN) introduced the following bill; which was read twice and referred to the Committee on the Judiciary A BILL To amend title 11, United States Code, to provide bank- ruptcy protections for medically distressed debtors, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Medical Bankruptcy 4 Fairness Act of 2021’’. 5 SEC. 2. DEFINITIONS. 6 (a) IN GENERAL.—Section 101 of title 11, United 7 States Code, is amended— 8 VerDate Sep 11 2014 03:24 Feb 19, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S146.IS S146 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 146 IS (1) by inserting after paragraph (39A) the fol- 1 lowing: 2 ‘‘(39B) The term ‘medical debt’ means any 3 debt incurred voluntarily or involuntarily— 4 ‘‘(A) as a result of the diagnosis, cure, 5 mitigation, or treatment of injury, deformity, or 6 disease of an individual; or 7 ‘‘(B) for services performed by a medical 8 professional for the prevention of disease or ill- 9 ness in an individual. 10 ‘‘(39C) The term ‘medically distressed debtor’ 11 means— 12 ‘‘(A) a debtor who, during the 3-year pe- 13 riod preceding the date of the filing of the peti- 14 tion— 15 ‘‘(i) incurred or paid aggregate med- 16 ical debt for the debtor, a dependent of the 17 debtor, or a nondependent parent, grand- 18 parent, sibling, child, grandchild, or spouse 19 of the debtor that was not paid by any 20 third-party payor and was greater than the 21 lesser of— 22 ‘‘(I) 10 percent of the adjusted 23 gross income (as such term is defined 24 VerDate Sep 11 2014 03:24 Feb 19, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S146.IS S146 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 146 IS in section 62 of the Internal Revenue 1 Code of 1986) of the debtor; or 2 ‘‘(II) $10,000; 3 ‘‘(ii) did not receive domestic support 4 obligations, or had a spouse or dependent 5 who did not receive domestic support obli- 6 gations, of at least $10,000 due to a med- 7 ical issue of the individual obligated to pay 8 that would cause the obligor to meet the 9 requirements under clause (i) or (iii), if the 10 obligor was a debtor in a case under this 11 title; or 12 ‘‘(iii) experienced a change in employ- 13 ment status that resulted in a reduction in 14 wages, salaries, commissions, or work 15 hours or resulted in unemployment due 16 to— 17 ‘‘(I) an injury, deformity, or dis- 18 ease of the debtor; 19 ‘‘(II) care for an injured, de- 20 formed, or ill dependent or non- 21 dependent parent, grandparent, sib- 22 ling, child, grandchild, or spouse of 23 the debtor; or 24 VerDate Sep 11 2014 03:24 Feb 19, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S146.IS S146 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 146 IS ‘‘(III) the national emergency de- 1 clared by the President under the Na- 2 tional Emergencies Act (50 U.S.C. 3 1601 et seq.) with respect to the 4 coronavirus disease 2019 (COVID– 5 19) or another emergency declared by 6 a Federal, State, or local official relat- 7 ing to a public health crisis; or 8 ‘‘(B) a debtor who is the spouse of a debt- 9 or described in subparagraph (A).’’. 10 (b) CONFORMING AMENDMENTS.—Section 104 of 11 title 11, United States Code, is amended— 12 (1) in subsection (a), in the matter preceding 13 paragraph (1), by inserting ‘‘101(39C)(A),’’ after 14 ‘‘101(19A),’’; and 15 (2) in subsection (b), by inserting 16 ‘‘101(39C)(A),’’ after ‘‘101(19A),’’. 17 SEC. 3. EXEMPTIONS. 18 (a) EXEMPT PROPERTY.—Section 522 of title 11, 19 United States Code, is amended by adding at the end the 20 following: 21 ‘‘(r)(1) If a medically distressed debtor exempts prop- 22 erty listed in subsection (b)(2), the debtor may, in lieu 23 of the exemption provided under subsection (d)(1), elect 24 to exempt the aggregate interest of the debtor, not to ex- 25 VerDate Sep 11 2014 03:24 Feb 19, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S146.IS S146 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 146 IS ceed $250,000 in value, in property described in para- 1 graph (3). 2 ‘‘(2) If a medically distressed debtor exempts prop- 3 erty listed in subsection (b)(3) and the exemption provided 4 under applicable law for the kind of property described 5 in paragraph (3) is for less than $250,000 in value, the 6 debtor may elect to exempt the aggregate interest of the 7 debtor, not to exceed $250,000 in value, in any such prop- 8 erty. 9 ‘‘(3) The property described in this paragraph is— 10 ‘‘(A) real property or personal property that the 11 debtor or a dependent of the debtor uses as a resi- 12 dence; 13 ‘‘(B) a cooperative that owns property that the 14 debtor or a dependent of the debtor uses as a resi- 15 dence; or 16 ‘‘(C) a burial plot for the debtor or a dependent 17 of the debtor.’’. 18 (b) CONFORMING AMENDMENTS.—Section 104 of 19 title 11, United States Code, is amended— 20 (1) in subsection (a), in the matter preceding 21 paragraph (1), by inserting ‘‘522(r),’’ after 22 ‘‘522(q),’’; and 23 (2) in subsection (b), by inserting ‘‘522(r),’’ 24 after ‘‘522(q),’’. 25 VerDate Sep 11 2014 03:24 Feb 19, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S146.IS S146 pbinns on DSKJLVW7X2PROD with BILLS 6 •S 146 IS SEC. 4. WAIVER OF ADMINISTRATIVE REQUIREMENTS. 1 (a) CASE UNDER CHAPTER 7.—Section 707(b) of 2 title 11, United States Code, is amended by adding at the 3 end the following: 4 ‘‘(8) Paragraph (2) does not apply in any case 5 in which the debtor is a medically distressed debt- 6 or.’’. 7 (b) CASE UNDER CHAPTER 13.—Section 1325(b)(1) 8 of title 11, United States Code, is amended— 9 (1) in subparagraph (A), by striking ‘‘or’’ at 10 the end; 11 (2) in subparagraph (B), by striking the period 12 at the end and inserting ‘‘; or’’; and 13 (3) by adding at the end the following: 14 ‘‘(C) the debtor is a medically distressed 15 debtor.’’. 16 SEC. 5. CREDIT COUNSELING. 17 Section 109(h)(4) of title 11, United States Code, is 18 amended by inserting ‘‘a medically distressed debtor or’’ 19 after ‘‘apply with respect to’’. 20 SEC. 6. STUDENT LOAN UNDUE HARDSHIP. 21 Section 523(a)(8) of title 11, United States Code, is 22 amended by inserting ‘‘the debtor is a medically distressed 23 debtor, or’’ before ‘‘excepting’’. 24 VerDate Sep 11 2014 03:24 Feb 19, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S146.IS S146 pbinns on DSKJLVW7X2PROD with BILLS 7 •S 146 IS SEC. 7. ATTESTATION BY DEBTOR. 1 Section 521 of title 11, United States Code, is 2 amended by adding at the end the following: 3 ‘‘(k) If the debtor seeks relief as a medically dis- 4 tressed debtor, the debtor shall file a statement of medical 5 expenses relevant to the determination of whether the 6 debtor is a medically distressed debtor, which shall declare 7 under penalty of perjury that such medical expenses were 8 not incurred for the purpose of bringing the debtor within 9 the meaning of the term ‘medically distressed debtor’.’’. 10 SEC. 8. EFFECTIVE DATE; APPLICATION OF AMENDMENTS. 11 (a) EFFECTIVE DATE.—Except as provided in sub- 12 section (b), this Act and the amendments made by this 13 Act shall take effect on the date of enactment of this Act. 14 (b) APPLICATION OF AMENDMENTS.—The amend- 15 ments made by this Act shall apply only with respect to 16 cases commenced under title 11, United States Code, on 17 or after the date of enactment of this Act. 18 Æ VerDate Sep 11 2014 03:24 Feb 19, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\S146.IS S146 pbinns on DSKJLVW7X2PROD with BILLS