I have accrued over $25,000 in medical bills that I can’t pay, and that's not counting the $12,000 I've already put on credit cards. If I file for bankruptcy, can I have my medical bills discharged?
Medical debt is a common reason people seek bankruptcy relief. Read on to learn more about wiping out medical bills through bankruptcy.
When you file for bankruptcy, you’ll separate your debts into different categories—priority and nonpriority unsecured debt. Debts such as domestic support obligations and recent overdue taxes receive special priority treatment and bankruptcy won’t eliminate them. Also, they’ll be paid first if money is available to pay debt.
Fortunately, medical bills are general unsecured debts. Just like your credit cards, they don’t receive priority treatment. You’ll be able to wipe them out easily by filing for bankruptcy.
Learn more about the different types of debt in Secured, Unsecured, and Priority Claims in Bankruptcy.
You’ll be able to eliminate medical debt in both Chapter 7 or Chapter 13 bankruptcy. The type of bankruptcy you’ll file will depend on which makes the most sense for your situation and whether you meet qualification requirements.
In Chapter 7 Bankruptcy
If you qualify for Chapter 7, your discharge will wipe out your medical bills along with most other general unsecured debts (for instance, student loans fall into this category but aren't dischargeable). There is no limit to the amount of medical debt you can discharge in Chapter 7 bankruptcy. Any medical bills you paid with your credit card will also be discharged along with the rest of your credit card debt and other qualifying obligations.
However, to qualify for a Chapter 7, your disposable income must be low enough to pass the Chapter 7 means test. Find out more about the steps you’ll take in Chapter 7 bankruptcy.
In Chapter 13 Bankruptcy
In this chapter, bills are lumped in with your other general unsecured debts in your repayment plan. The amount you’ll pay general unsecured creditors depends on your income, expenses, and nonexempt assets.
Each creditor then receives a pro rata portion of the total amount going towards these debts. However, keep in mind that you might not be eligible for Chapter 13 bankruptcy. You must make enough to pay the bills you’re required to pay in full through your plan—such as your priority creditors. Also, your medical bills and other debts can't exceed the allowed Chapter 13 debt limits.
You can learn more about your options by consulting with a bankruptcy attorney or by checking out more on Chapter 7 and Chapter 13 Bankruptcy. Or, start by finding out about the steps involved in bankruptcy once you decide to file.