Three Cheers For The Medical Bankruptcy Fairness Act

It’s not likely to pass, but in the spirit of “hope” and because we just plain think it’s a great idea, we’re writing about the Medical Bankruptcy Fairness Act, which promises a few radical changes to current bankruptcy law:

1. Discharge student loans: Let people with more than $10,000 in medical bills in the prior three years before filing bankruptcy also discharge their student loans.

2. Axe credit counseling: You wouldn’t have to take the required credit counseling course if your debt is made up of medical bills.

3. Keep your home: Right now, the federal homestead exemption only lets you keep up to $23,000 in property (state exemptions often let you keep more); this bill would let you exempt up to $250,000, if for some reason you used the federal exemptions.

As Katy Stech reports for the Wall Street Journal (“Bill Would Let ‘Medically Distressed’ Cast Off Student Loans“), the bill is sponsored by Sen. Sheldon Whitehouse and supported by none other than Sen. Elizabeth Warren. Stech writes that Warren is the only one so far who has offered her support.

Let’s hope more politicians sign on.

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Three Cheers For The Medical Bankruptcy Fairness Act