Key Takeaways
- • Representative Steve Cohen (D-TN) introduced H.R. 9670 on July 14, 2026, creating a new "medically distressed debtor" bankruptcy category for individuals whose finances have been significantly impacted by medical costs or medical-related income loss.
- • Eligibility requires debtors to have incurred uncovered medical debt exceeding 10% of adjusted gross income or $10,000 within three years prior to filing, or experienced job/income loss due to illness, injury, or caregiving obligations.
- • The bill would waive certain Chapter 7 dismissal rules, expand Chapter 13 repayment plan eligibility, and exempt qualifying debtors from mandatory pre-filing credit counseling requirements—providing material relief from existing bankruptcy procedures.
- • The legislation currently has one cosponsor and has been introduced in the 119th Congress; it addresses a significant policy gap in bankruptcy protections for medical debt, which remains a leading cause of personal insolvency in the United States.
Summary
Representative Steve Cohen introduced H.R. 9670: Medical Bankruptcy Fairness Act of 2026 on July 14, 2026, proposing substantive reforms to federal bankruptcy law targeting debtors whose financial distress stems primarily from medical expenses or medical-related income disruption. The bill creates a distinct legal category—the "medically distressed debtor"—within Title 11 of the U.S. Code to provide tailored bankruptcy protections for this population.
The legislation establishes clear qualification thresholds. An individual qualifies if, during the three-year period preceding bankruptcy filing, they incurred or paid uncovered medical debt exceeding the lesser of 10% of adjusted gross income or $10,000; maintained domestic support obligations of at least $10,000 affected by a medical condition; or experienced job or income loss attributable to personal illness, injury, caregiving responsibilities, or declared national/public health emergencies. The definition extends coverage to spouses of qualifying individuals, broadening the potential beneficiary pool.
The bill would materially modify existing bankruptcy protections for medically distressed debtors through three mechanisms. First, it would waive certain dismissal rules under Chapter 7 (liquidation bankruptcy) that currently restrict relief for individuals above specified income thresholds, allowing medically distressed debtors greater access to this debt-discharge option. Second, it would create an additional exception permitting medically distressed debtors to qualify for Chapter 13 repayment plans under expanded criteria. Third, it would exempt these debtors from the mandatory credit counseling requirement typically mandated before bankruptcy filing, reducing procedural barriers to relief.
With one cosponsor at introduction and current status as "Introduced," H.R. 9670 reflects Congressional recognition that medical debt constitutes a distinct driver of personal insolvency warranting specialized statutory treatment. The bill's provisions address a policy gap in the existing bankruptcy framework, which has not previously distinguished medical debt from other consumer debt categories despite empirical evidence regarding its prevalence and severity in personal bankruptcy filings.
The legislation establishes clear qualification thresholds. An individual qualifies if, during the three-year period preceding bankruptcy filing, they incurred or paid uncovered medical debt exceeding the lesser of 10% of adjusted gross income or $10,000; maintained domestic support obligations of at least $10,000 affected by a medical condition; or experienced job or income loss attributable to personal illness, injury, caregiving responsibilities, or declared national/public health emergencies. The definition extends coverage to spouses of qualifying individuals, broadening the potential beneficiary pool.
The bill would materially modify existing bankruptcy protections for medically distressed debtors through three mechanisms. First, it would waive certain dismissal rules under Chapter 7 (liquidation bankruptcy) that currently restrict relief for individuals above specified income thresholds, allowing medically distressed debtors greater access to this debt-discharge option. Second, it would create an additional exception permitting medically distressed debtors to qualify for Chapter 13 repayment plans under expanded criteria. Third, it would exempt these debtors from the mandatory credit counseling requirement typically mandated before bankruptcy filing, reducing procedural barriers to relief.
With one cosponsor at introduction and current status as "Introduced," H.R. 9670 reflects Congressional recognition that medical debt constitutes a distinct driver of personal insolvency warranting specialized statutory treatment. The bill's provisions address a policy gap in the existing bankruptcy framework, which has not previously distinguished medical debt from other consumer debt categories despite empirical evidence regarding its prevalence and severity in personal bankruptcy filings.
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