Medical Bankruptcy Fairness Act of 2026

The Medical Bankruptcy Fairness Act of 2026 amends federal bankruptcy laws to create a new category called "medically distressed debtor" for individuals whose debt is primarily caused by medical issues, such as illness, injury, or a loss of income due to caring for a sick family member. Under this bill, people in this category would receive special protections, including an additional $250,000 exemption for their primary home or burial plots and a waiver of certain financial tests required to file for Chapter 7 or Chapter 13 bankruptcy. To qualify, a debtor must show that unpaid medical expenses exceeded a specific threshold relative to their income or that their financial situation was directly impacted by a health crisis or national emergency. The legislation also requires debtors to submit a sworn statement detailing their medical costs and ensures that bankruptcy records for these individuals are excluded from their consumer credit reports. These changes apply to bankruptcy cases filed after the law is enacted.