H.R. 9670: Medical Bankruptcy Fairness Act of 2026

This bill would change federal bankruptcy law to give special treatment to people whose finances have been heavily affected by medical costs or medical-related loss of income.

Who would qualify

The bill creates a new bankruptcy category called a medically distressed debtor. A person would qualify if, during the 3 years before filing bankruptcy, they:

• incurred or paid medical debt for themselves or certain close family members that was not covered by a third party, and that debt was more than the lesser of 10% of their adjusted gross income or $10,000; or
• had at least $10,000 in domestic support obligations affected by a medical issue in a way that would have met the bill’s medical-debt test; or
• had a job or income loss because of their own illness or injury, caring for an ill or injured close family member, or because of a declared national, public health, or similar emergency.

The definition also covers the spouse of someone who meets these requirements.

New bankruptcy protections

For people who qualify, the bill would make several bankruptcy rules more flexible:

• Chapter 7: It would waive one of the existing dismissal rules that can block a Chapter 7 case for people with certain income levels.
• Chapter 13: It would let medically distressed debtors qualify for Chapter 13 repayment plans under an additional exception.
• Credit counseling: It would exempt these debtors from the normal credit counseling requirement that usually applies before filing bankruptcy.
• Student loans: It would allow medically distressed debtors to try to discharge student loans more easily by treating their status as an additional basis for claiming undue hardship.

Property exemptions

The bill would let medically distressed debtors protect more property in bankruptcy. In some cases, they could exempt up to $250,000 of value in:

• a home or other residence;
• a cooperative housing interest used as a residence; or
• a burial plot for the debtor or a dependent.

This would apply when the normal state or federal exemption rules are lower or otherwise would not protect as much property.

Paperwork and verification

Anyone claiming this status would have to file a statement listing the relevant medical expenses and declare, under penalty of perjury, that the expenses were not incurred just to qualify for the special bankruptcy treatment.

Credit reports

The bill would bar consumer reporting agencies from including information about a medically distressed debtor’s bankruptcy in credit reports.

Timing

The law would take effect when enacted, but it would apply only to bankruptcy cases filed on or after the enactment date.

Relevant Companies

None found