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Bankruptcy As Pandemic Relief?

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In a Nutshell

According to a February 2, 2021 press release from Senator Sheldon Whitehouse's office, the Senator and four of his colleagues are introducing legislation aimed to provide bankruptcy relief to medically distressed debtors.

Written by Your Upsolve Team
Updated February 4, 2021

Medical debt is rapidly increasing due to the COVID-19 pandemic. It’s an unfortunate combination of the fact that most Americans' health insurance is tied to their employment and the fact that millions lost their employment when the world shut down. 

Recognizing the need for fast and meaningful relief, United States Senators Sheldon Whitehouse (D-RI), Sherrod Brown (D-OH), Elizabeth Warren (D-MA),Tammy Baldwin (D-WI), and Richard Blumenthal (D-CT) took initiative and introduced the Medical Bankruptcy Fairness Act of 2021

The legislation seeks to provide relief to consumers forced into bankruptcy because of medical debt. It also applies to folks who lost their job due to a public-health related shut-down.

Notably, in addition to waiving the credit counseling requirement currently in place for all individual debtors, the Medical Bankruptcy Fairness Act of 2021 allows homeowners to protect up to $250,000 in home equity. It also provides medically distressed consumers a true fresh start by discharging their student loans. Currently, that is only possible if the court finds that not discharging the debt would lead to an undue hardship for the debtor. 

It’s unclear whether this bill will gain enough traction to make its way through this Congress. It didn’t last year.[1] Of course, for the average American consumer, things have generally only gotten worse since then. So, if bankruptcy as a form of targeted pandemic relief is going to happen, 2021 is the year to make it happen. We’ll stay tuned and keep our eyes open for any developments. 

For now we leave you with this important reminder:

Person with phone and phone number for Congress


  1. (2021). (n.d.). S. 4305 — 116th Congress: Medical Bankruptcy Fairness Act of 2020.. Retrieved February 3, 2021, from

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Upsolve is a 501(c)(3) nonprofit that started in 2016. Our mission is to help low-income families resolve their debt and fix their credit using free software tools. Our team includes debt experts and engineers who care deeply about making the financial system accessible to everyone. We have world-class funders that include the U.S. government, former Google CEO Eric Schmidt, and leading foundations.

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