Obamacare repeal has an obtuse tie to the bankruptcy code.

As a bankruptcy attorney in Mount Vernon, IL for over 20 years, I read through and analyze court rulings throughout the country. I discovered that the House bill intended to repeal Obamacare has a strange bankruptcy provision…

HR 1275 is the House bill intended to repeal the Patient Protection and Affordable Care Act.

Among its provisions is Section 122, which contains an odd allusion to the Bankruptcy Code:

(c) Protection Of Certain Assets In Case Of Individuals Covered Under Limited Benefit Insurance.—

(1) IN GENERAL.—Notwithstanding any other provision of law, if an individual is covered under limited benefit insurance for a plan year and benefits under such insurance have reached the annual limit under such insurance for items and services furnished in the plan year, the individual is not liable for debt incurred and arising from the provision of subsequently furnished items and services during the plan year, regardless of whether benefits are otherwise covered for such items and services under such policy, insofar as the liability attributable to such items and services exceeds—

(A) the bankruptcy valuation of the individual’s property at the time the debt is incurred; reduced by

(B) such annual limit of benefits under the limited benefit insurance for the plan year.

Property in the amount so protected from liability shall be exempt and immune from attachment or seizure with respect to any judgment related to such debt.

(2) BANKRUPTCY VALUATION DEFINED.—In this subsection, the term “bankruptcy valuation” means, with respect to property of an individual as of a date, the value of the property as of such date as determined as if the individual were a debtor in a bankruptcy case that could have been filed under title 11 of the United States Code and the property could not be exempt under section 522 of such title.


                I have consulted with bankruptcy colleagues around the country about this section and we have come to the following consensus:

  1. it is very poorly written and
  2. it does not affect the bankruptcy laws.

What we think it means is that if you are sued by your insurance company or a medical provider for non-payment, the assets of the individual will not be seized to collect on any of those bills as long as the value of the assets are within the bankruptcy exemptions.

It is not forcing a collector to use federal law or statutes to sue. Nor does it force states to use the federal exemptions. In fact, all but 16 states have opted out of the federal exemptions in favor of their own.

And since these exemptions – when they DO apply – apply to any judgment against a defendant/debtor, this section seems superfluous and/or redundant if not feckless.

My first thought was “this is like saying, ‘if you are sued, it does not impede your right to vote’,” but that is also incorrect. This provision does NOT amend or eliminate a defendant/debtor’s right to protect their assets under federal or state exemption law.

Nor does it amend or affect the provisions of the bankruptcy code.

It provides a person a right already given to them in another area of federal law.

And isn’t that nice of Congress to provide that …


About the author:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Waltonville, Woodlawn, Lawrenceville, Centralia, Louisville, Xenia, Grayville, Effingham, Dieterich, Vandalia, McLeansboro, Dahlgren, Albion, Flora, Clay City, Kinmundy, Chester, Sparta, Olney, Mount Carmel, Nashville, Fairfield, Cisne, Wayne City, Carmi, Grayville, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com



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