Medical Bankruptcy Fairness Act of 2026

The Medical Bankruptcy Fairness Act of 2026 creates a special legal category for individuals overwhelmed by medical bills, allowing them to receive more favorable treatment in bankruptcy court. To qualify as a "medically distressed debtor," a person must have incurred significant unpaid medical costs or lost income due to illness, injury, or caregiving within the last three years. The bill grants these individuals an additional $250,000 exemption for their primary home or burial plot, waives certain financial tests required to file for Chapter 7 bankruptcy, and prevents their bankruptcy records from appearing on credit reports. Furthermore, the law makes it easier for medically distressed debtors to discharge student loans and simplifies the paperwork they must submit to the court. These changes aim to provide relief specifically for those whose financial hardship stems directly from medical issues.