The “Medical Bankruptcy Fairness Act of 2008,” introduced by Representative Carol Shea-Porter (D-N.H.), would increase the federal homestead exemption in bankruptcy to $250,000 for “medically distressed debtors,” BankruptcyLawNetwork.com reported yesterday. H.R. 5138 also prohibits trustees in such instances from dismissing a case or converting to chapter 13 based on the substantial abuse provision of 707(b) of Title ll. The bill defines a medically distressed debtor as a debtor in bankruptcy who has spent more than 25 percent of annual income on unreimbursed medical expenses or has lost more than four weeks of work due to the debtor’s or a relative’s illness.

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