[Congressional Record Volume 155, Number 122 (Thursday, August 6, 2009)]
[Senate]
[Page S9022]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. WHITEHOUSE:
  S. 1624. 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; to the Committee on 
the Judiciary.
  Mr. WHITEHOUSE. Mr. President, I rise today to introduce legislation 
that would help families struggling with medical debts overcome hurdles 
that under current law make it difficult for them to find relief in the 
bankruptcy system. With medical costs at an all-time high and the 
unemployment rate hovering near 10 percent nationwide--and 12.4 percent 
in my home State of Rhode Island--too many individuals and families 
struck with injury and illness have no other option but to file for 
bankruptcy. According to a recent Harvard University study, health 
care-related costs have been a primary driver of personal bankruptcy 
filings, contributing to over 62 percent of filings in 2007.
  The statistics are as shocking as the personal stories are 
heartbreaking. Countless Rhode Islanders have written to me during my 
time in office asking for help with crippling medical costs, and I want 
to share just two of their stories with you today.
  Adam, a 23-year-old from Bristol, recently underwent surgery for 
cancer. Adam's treatment plan requires him to undergo a CT scan every 2 
months. While his insurance initially paid for his health costs, he 
received word not long after his surgery that his policy was ``maxed 
out'' and that he would have to pay $6,700 out of pocket for an 
upcoming CT scan. As of today, Adam, a young man just starting his 
adult life, has $20,000 in medical debt and reports that he ``cannot 
see any light at the end of the tunnel.''
  Robert, a veteran and retiree also from Warwick, suffered a major 
heart attack in November of 2004. Although he had health insurance, 
Robert was responsible for paying a $2,000 deductible plus 20 percent 
of the cost of his care. After 40 years of working and saving, these 
medical costs wiped him out, and he had to sell his home.
  Adam and Robert have both suffered unexpected medical costs that have 
turned their lives upside down. These Rhode Islanders, like millions of 
others nationwide, may be forced to file for bankruptcy to get a clean 
start--but when they do, they will learn that the bankruptcy process 
can be time consuming and costly and ultimately may not allow them to 
stay in their homes.
  The legislation that I am introducing today, the Medical Bankruptcy 
Fairness Act of 2009, would help people who because of medical costs 
have no other choice but to file for bankruptcy. The bill would waive 
procedural hurdles so that Adam and Robert would have the option of a 
speedier, less expensive, and more efficient bankruptcy. To begin with, 
it would waive credit counseling requirements for these debtors. Such 
requirements have little relevance to people whose debt stems not from 
poor budgeting but, rather, from uncontrollable medical expenses. The 
bill would also waive the so-called ``means test,'' making the filing 
process quicker and less costly and making sure that people have the 
ability to file to have their debts discharged in chapter 7, as opposed 
to a chapter 13 plan under which they would have made debt payments for 
3 to 5 years.
  In addition to removing these procedural hurdles, the Medical 
Bankruptcy Fairness Act would give people with high levels of medical 
debt the ability to retain at least $250,000 in home value through the 
bankruptcy process. The ``homestead exemption'' is one of many aspects 
of bankruptcy law that looks to the laws of the individual States. 
While filers in some States already have the ability to preserve home 
equity at this level, a number of States offer homestead exemptions of 
$5,000 or less. With the average home price nationwide around $200,000, 
the $250,000 exemption included in this bill will allow the majority of 
individuals and families crushed by medical debt to keep their homes.
  Finally, the bill would eliminate an obstacle that prevents many 
bankruptcy filers from accessing the chapter 7 bankruptcy system, which 
as I mentioned earlier is the simplest and most efficient form of 
bankruptcy. Because attorneys' fees are ``discharged'' at the end of a 
chapter 7 bankruptcy, attorneys generally require the upfront payment 
of fees in chapter 7 proceedings. Many debtors who would be better off 
filing for a quicker and less costly bankruptcy in chapter 7 are forced 
to file in chapter 13 because they don't have enough cash to pay the 
attorney. The Medical Bankruptcy Fairness Act would make attorneys' 
fees nondischargeable in chapter 7 bankruptcies, as in chapter 13 
bankruptcies, making it easier for debtors to elect the more efficient 
chapter 7 proceeding.
  Before I conclude, I want to acknowledge the hard work of my 
colleague from Massachusetts, Senator Kennedy, on the issue of medical 
debt. Senator Kennedy offered amendments during the consideration of 
the 2005 bankruptcy reforms that would have given people struggling 
with medical debts treatment similar to that which they would get under 
the Medical Bankruptcy Fairness Act. Unfortunately, those amendments 
were voted down. I look forward to working with Senator Kennedy to make 
sure that we don't miss another opportunity to help Americans 
struggling with medical debt.
  There are people in every State suffering from medical hardship and 
related debts who would benefit from this legislation. I urge my 
colleagues to work with me to pass it to Adam and Robert and the 
millions like them nationwide a clean start in bankruptcy.
                                 ______