Medical Bankruptcy Fairness Act of 2014

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medical Bankruptcy Fairness Act of 
2014''.

SEC. 2. DEFINITIONS.

    (a) In General.--Section 101 of title 11, United States Code, is 
amended--
            (1) by inserting after paragraph (39A) the following:
            ``(39B) The term `medical debt' means any debt incurred 
        voluntarily or involuntarily--
                    ``(A) as a result of the diagnosis, cure, 
                mitigation, or treatment of injury, deformity, or 
                disease of an individual; or
                    ``(B) for services performed by a medical 
                professional in the prevention of disease or illness of 
                an individual.
            ``(39C) The term `medically distressed debtor' means--
                    ``(A) a debtor who, during the 3 years before the 
                date of the filing of the petition--
                            ``(i) incurred or paid aggregate medical 
                        debts for the debtor, a dependent of the 
                        debtor, or a nondependent parent, grandparent, 
                        sibling, child, grandchild, or spouse of the 
                        debtor that were not paid by any third-party 
                        payor and were greater than the lesser of--
                                    ``(I) 10 percent of the debtor's 
                                adjusted gross income (as such term is 
                                defined in section 62 of the Internal 
                                Revenue Code of 1986); or
                                    ``(II) $10,000;
                            ``(ii) did not receive domestic support 
                        obligations, or had a spouse or dependent who 
                        did not receive domestic support obligations, 
                        of at least $10,000 due to a medical issue of 
                        the person obligated to pay that would cause 
                        the obligor to meet the requirements under 
                        clause (i) or (iii), if the obligor was a 
                        debtor in a case under this title; or
                            ``(iii) experienced a change in employment 
                        status that resulted in a reduction in wages, 
                        salaries, commissions, or work hours or 
                        resulted in unemployment due to--
                                    ``(I) an injury, deformity, or 
                                disease of the debtor; or
                                    ``(II) care for an injured, 
                                deformed, or ill dependent or 
                                nondependent parent, grandparent, 
                                sibling, child, grandchild, or spouse 
                                of the debtor; or
                    ``(B) a debtor who is the spouse of a debtor 
                described in subparagraph (A).''.
    (b) Conforming Amendments.--Section 104 of title 11, United States 
Code, is amended--
            (1) in subsection (a), by inserting ``101(39C)(A),'' after 
        ``101(19)(A),''; and
            (2) in subsection (b), by inserting ``101(39C)(A),'' after 
        ``101(19)(A),''.

SEC. 3. EXEMPTIONS.

    (a) Exempt Property.--Section 522 of title 11, United States Code, 
is amended by adding at the end the following:
    ``(r)(1) If a medically distressed debtor exempts property listed 
in subsection (b)(2), the debtor may, in lieu of the exemption provided 
under subsection (d)(1), elect to exempt the debtor's aggregate 
interest, not to exceed $250,000 in value, in property described in 
paragraph (3) of this subsection.
    ``(2) If a medically distressed debtor exempts property listed in 
subsection (b)(3) and the exemption provided under applicable law 
specifically for the kind of property described in paragraph (3) is for 
less than $250,000 in value, the debtor may elect to exempt the 
debtor's aggregate interest, not to exceed $250,000 in value, in any 
such property.
    ``(3) The property described in this paragraph is--
            ``(A) real property or personal property that the debtor or 
        a dependent of the debtor uses as a residence;
            ``(B) a cooperative that owns property that the debtor or a 
        dependent of the debtor uses as a residence; or
            ``(C) a burial plot for the debtor or a dependent of the 
        debtor.''.
    (b) Conforming Amendments.--Section 104 of title 11, United States 
Code, is amended--
            (1) in subsection (a), by inserting ``522(r),'' after 
        ``522(q),''; and
            (2) in subsection (b), by inserting ``522(r),'' after 
        ``522(q),''.

SEC. 4. WAIVER OF ADMINISTRATIVE REQUIREMENTS.

    (a) Case Under Chapter 7.--Section 707(b) of title 11, United 
States Code, is amended by adding at the end the following:
            ``(8) Paragraph (2) does not apply in any case in which the 
        debtor is a medically distressed debtor.''.
    (b) Case Under Chapter 13.--Section 1325(b)(1) of title 11, United 
States Code, is amended--
            (1) in subparagraph (A), by striking ``or'' at the end;
            (2) in subparagraph (B), by striking the period at the end 
        and inserting ``; or''; and
            (3) by adding at the end the following:
                    ``(C) the debtor is a medically distressed 
                debtor.''.

SEC. 5. CREDIT COUNSELING.

    Section 109(h)(4) of title 11, United States Code, is amended by 
inserting ``a medically distressed debtor or'' after ``apply with 
respect to''.

SEC. 6. STUDENT LOAN UNDUE HARDSHIP.

    Section 523(a)(8) of title 11, United States Code, is amended by 
inserting ``the debtor is a medically distressed debtor or'' before 
``excepting''.

SEC. 7. ATTESTATION BY DEBTOR.

    Section 521 of title 11, United States Code, is amended by adding 
at the end the following:
    ``(k) If the debtor seeks relief as a medically distressed debtor, 
the debtor shall file a statement of medical expenses relevant to the 
determination of whether the debtor is a medically distressed debtor, 
which statement shall declare under penalty of perjury that such 
medical expenses were not incurred for the purpose of bringing the 
debtor within the meaning of the term medically distressed debtor.''.

SEC. 8. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

    (a) Effective Date.--Except as provided in subsection (b), this Act 
and the amendments made by this Act shall take effect on the date of 
enactment of this Act.
    (b) Application of Amendments.--The amendments made by this Act 
shall apply only with respect to cases commenced under title 11, United 
States Code, on or after the date of enactment of this Act.

Summary: Medical Bankruptcy Fairness Act of 2014 - Amends federal bankruptcy law to cite circumstances under which a medically distressed debtor may elect to exempt from the property of the estate in bankruptcy up to $250,000 of the debtor's aggregate interest in: (1) specified real or personal property that the debtor uses as a residence, (2) a cooperative that owns the property used as a residence by the debtor or a dependent of the debtor, or (3) a burial plot for the debtor or debtor's dependent. Applies the same election to certain other property of a medically distressed debtor, including certain retirement funds held in a tax-exempt account. Declares inapplicable to a medically distressed debtor: (1) certain presumptions that granting relief under Chapter 7 would constitute abuse of Chapter 7, and (2) mandatory court disapproval of a debtor's plan under chapter 13 upon objection by the trustee or the holder of an allowed unsecured claim. Waives the credit counseling prerequisite for filing for debt relief in the case of a medically distressed debtor. Permits a medically distressed debtor to discharge in bankruptcy debts for certain educational loans. Requires a debtor who seeks relief as a medically distressed debtor to attest in writing, and under penalty of perjury, that debtor's medical expenses are genuine, and are not specifically incurred to bring the debtor within the meaning of quot, medically distressed debtor. quot,