Woman who lost son fights for bankruptcy changes

A Rhode Island woman urged senators Tuesday to ease bankruptcy rules for people devastated by medical debt, as she described the pain of losing a child and going broke from his health care bills.

The frightful experience of Kerry Burns, of Coventry, R.I., raised a crucial question of bankruptcy law: should people going broke due to high medical bills get a break over those bankrupted by divorce or high credit card bills?

Sen. Sheldon Whitehouse, D-R.I., chaired the Senate Judiciary subcommittee hearing on his bill to carve out an exception for people whose medical bills were the main cause of their financial distress.

Whitehouse's approach was backed by Elizabeth Edwards, a cancer patient and wife of former Sen. John Edwards of North Carolina. Representatives of conservative think tanks argued no special status was justified.

Edwards, who is married to the former Democratic senator and presidential candidate, praised Whitehouse's plan as a way to give medical debtors "a less burdensome, less catastrophic bankruptcy option that recognizes the unique circumstances that have driven them to bankruptcy."

She is a senior fellow at the Center for American Progress Action Fund.

Sen. Jeff Sessions, R-Ala., said he disagreed with a major provision of Whitehouse's bill: elimination of an income-related test for medical debtors only. The test currently is required to determine if someone is qualified for a Chapter 7 bankruptcy, which allows the debtor to get a fresh start by wiping out all debts.

Burns, however, was the single witness who expressed the problem by recounting her horrific experience.

The Rhode Island social worker, with a master's degree, said she and her husband were not among the uninsured. They lost everything, even though insurance covered the majority of nearly $5 million in treatments for her son Finnegan, who was hospitalized in intensive care for 13 months before he died last March. Finnegan Burns, who lived to be only 4 1/2, had cystic fibrosis.

During his illness, Burns and her husband took leave from their jobs as debts piled up. They cashed in retirement funds, sold belongings including their second car, and received upward of 30 calls a day from creditors - who called their cell phones while they were with Finnegan in the intensive care unit.

Burns and her husband kept up mortgage payments through 10 months of hospitalization, but were no longer able to pay starting last January. Then came the bankruptcy filing.

"I have found that it is a demeaning and demoralizing process," she said. "In order to file bankruptcy, we needed money for a $250 retainer and a $1,300 filing fee. We had to borrow the money needed to 'officially' go bankrupt."

The couple was required to attend an online credit counseling class which had additional fees and questions asking "why we are going bankrupt and how we could have avoided the situation in which we currently find ourselves."

Critics of Whitehouse's bill said people whose financial problems were only partly from medical bills could file as medical debtors and receive special treatment.

"We need to get at what the true facts are," said Sessions, adding that someone with extraordinary medical bills, who is unable to work, would likely qualify under the income test to wipe out their debt.

Meanwhile, Sen. Max Baucus, D-Mont., a leader of the health care reform effort in the Senate, told reporters, "Every 30 seconds, another American files for bankruptcy after a serious health problem. In no other country is that the case."

Baucus commented at a news conference that was unrelated to the hearing.

Aparna Mathur, a research fellow at the American Enterprise Institute, asked, "Where do we draw the line for who we want to help and who we don't?"

The proposed legislation, applying to those who meet the bill's definition of medical debtors, would:

-Waive the means test and credit counseling requirements.

-Allow debtors to protect their homes from creditors, with an exemption of $250,000.

-Give debtors the option of paying attorneys fees when they are on firmer financial ground after completing the bankruptcy.