II 111th CONGRESS 1st Session S. 1624 IN THE SENATE OF THE UNITED STATES August 6, 2009 Mr. Whitehouse introduced the following bill; which was read twice and referred to the Committee on the Judiciary A BILL To amend title 11 of the United States Code, to provide protection for medical debt homeowners, to restore bankruptcy protections for individuals experiencing economic distress as caregivers to ill, injured, or disabled family members, and to exempt from means testing debtors whose financial problems were caused by serious medical problems, and for other purposes.

1.

Short title

This Act may be cited as the Medical Bankruptcy Fairness Act of 2009.

2.

Definitions

(a)

In general

Section 101 of title 11, the United States Code, is amended— (1)by inserting after paragraph (39A) the following: (39B)The term medical debt means any debt incurred directly or indirectly as a result of the diagnosis, cure, mitigation, treatment, or prevention of injury, deformity, or disease, or for the purpose of affecting any structure or function of the body. (39C)The term medically distressed debtor means a debtor who, in any consecutive 12-month period during the 3 years before the date of the filing of the petition— (A)incurred or paid medical debts for the debtor or a dependent of the debtor, or a nondependent member of the immediate family of the debtor (including any parent, grandparent, sibling, child, grandchild, or spouse of the debtor), that were not paid by any third party payor and were in excess of the lesser of— (i)10 percent of the debtor’s adjusted gross income (as such term is defined under section 62 of the Internal Revenue Code of 1986); or (ii)$10,000; (B)was a member of a household in which 1 or more members (including the debtor) lost all or substantially all of the member’s domestic support obligation income, taking into consideration any disability insurance payments, for 4 or more weeks, due to a medical problem of a person obligated to pay such domestic support; or (C)experienced a downgrade in employment status that correlates to a reduction in wages or work hours or results in unemployment, to care for an ill, injured, or disabled dependent of the debtor, or an ill, injured, or disabled nondependent member of the immediate family of the debtor (including any parent, grandparent, sibling, child, grandchild, or spouse of the debtor), for not less than 30 days. . (b)

Conforming amendments

Sections 104(b)(1) and 104(b)(2) of title 11, the United States Code, are each amended by inserting 101(39C)(A)(ii), after 101(19)(A).

3.

Exemptions

(a)

Exempt property

Section 522 of title 11, the United States Code, is amended by adding at the end the following: (r)For a debtor who is a medically distressed debtor, if the debtor elects to exempt property— (1)listed in subsection (b)(2), then in lieu of the exemption provided under subsection (d)(1), the debtor may elect to exempt the debtor’s aggregate interest, not to exceed $250,000 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the debtor or a dependent of the debtor; or (2)listed in subsection (b)(3), then if the exemption provided under applicable law specifically for property of the kind described in paragraph (1) is for less than $250,000 in value, the debtor may elect in lieu of such exemption to exempt the debtor’s aggregate interest, not to exceed $250,000 in value, in any such real or personal property, cooperative, or burial plot. . (b)

Conforming amendments

Sections 104(b)(1) and 104(b)(2) of title 11, the United States Code, are each amended by inserting 522(r), after 522(q),.

4.

Dismissal of a case or conversion to a case under chapter 11 or 13

Section 707(b) of title 11, the United States Code, is amended by adding at the end the following: (8)No judge, United States trustee (or bankruptcy administrator, if any), trustee, or other party in interest may file a motion under paragraph (2) if the debtor is a medically distressed debtor. .

5.

Credit counseling

Section 109(h)(4) of title 11 United States Code, is amended by inserting a medically distressed debtor or after with respect to.

6.

Nondischargeability of certain attorneys fees

Section 523(a) of title 11, United States Code, is amended— (1)in paragraph (18), by striking or at the end; (2)in paragraph (19), by striking the period at the end and inserting ; or; and (3)by inserting after paragraph (19) the following: (20)incurred by a debtor relating to attorneys fees generated as result of the debtor's filing of a petition under chapter 7. .

7.

Effective date; application of amendments

(a)

Effective date

Except as provided in subsection (b), this Act and the amendments made by this Act shall take effect on the date of the enactment of this Act. (b)

Application of amendments

The amendments made by this Act shall apply only with respect to cases commenced under title 11 of the United States Code on or after the date of the enactment of this Act.

8.

Attestation by debtor

Any debtor who seeks relief as a medically distressed debtor in accordance with the amendments made by this Act shall attest in writing and under penalty of perjury that the medical expenses of the debtor were genuine, and were not specifically incurred to bring the debtor within the coverage of the medical bankruptcy provisions, as provided in this Act and the amendments made by this Act.