Sponsors (2)
The bill makes it substantially easier for people burdened by recent medical bills to obtain bankruptcy relief and protect homes and credit records, at the expense of greater losses to creditors and taxpayers, new administrative and legal uncertainty, and added procedural requirements that may burden some vulnerable filers.
Low- and middle-income people with large recent medical bills (including lost earnings from illness or caregiving) can access bankruptcy protections more easily — the bill creates a 'medically distressed debtor' pathway that waives means-testing and covers spouses automatically.
Consumers who qualify as medically distressed will have those bankruptcies excluded from consumer reports, improving credit records and reducing discrimination in lending, housing, and employment.
Homeowners who qualify can protect up to $250,000 in home equity (and top up smaller state exemptions), shielding more housing and burial-plots value from creditors in bankruptcy.
Creditors and taxpayers could face larger losses from expanded medical-debt bankruptcy eligibility, which may lead lenders to tighten credit or raise interest rates for other consumers.
Key drafting choices (a cross-reference to a repealed tax provision and unspecified amendment text) create legal uncertainty that will likely produce litigation and inconsistent eligibility rulings.
Documentation, certification, and penalty‑of‑perjury requirements impose procedural burdens and risk perjury liability for vulnerable filers and could increase legal costs and delays for people urgently needing relief.
Based on analysis of 9 sections of legislative text.
Creates a "medically distressed debtor" test, expands homestead/burial exemptions, waives some means-test and disposable-income rules for qualifying filers, requires a medical-expense attestation, and hides those bankruptcies from credit reports.
Official title: To amend title 11, United States Code, to provide bankruptcy protections for medically distressed debtors, and for other purposes.
Introduced July 14, 2026 by Stephen Cohen · Last progress July 14, 2026
Creates a new "medically distressed debtor" status in the Bankruptcy Code and gives people who meet that test special bankruptcy protections. It defines medical debt, sets lookback and dollar tests, lets qualifying filers claim a larger home/burial exemption, exempts them from certain means-test and disposable-income rules, requires a signed medical expense statement, and prevents consumer reporting agencies from listing those bankruptcies on credit reports. The changes apply to bankruptcy cases filed on or after enactment. The bill adds new statutory definitions and procedural rules, plus an attestation requirement and a consumer-reporting exclusion tied to the new medically distressed debtor classification.