Summary: Bankruptcy can help with unpaid medical bills. Which type of bankruptcy depends on your situation. 

Can Bankruptcy Help With Unpaid Medical Bills?

In most cases, bankruptcy may help wipe out medical bills that you cannot afford to pay. If large, future medical expenses are anticipated, delaying filing bankruptcy may be wise.

With the rising costs of medical care, even with health insurance, the cost of medical expenses after the deductible and co-pay can create an overwhelming amount of medical debt. In some cases, bankruptcy may help.

There is no special bankruptcy for medical debt but where the driving force causing the bankruptcy is large, unaffordable medical expense, some people call this a “medical bankruptcy.” This is still just a bankruptcy, as in a Chapter 7 bankruptcy or Chapter 13 bankruptcy, for instance, but is primarily filed due to crushing medical debt or to stabilize a situation involving ongoing medical care.

Chapter 7 bankruptcy for medical bills

If the bills are behind you and things are relatively stable regarding your health, a Chapter 7 bankruptcy may offer a clean slate. Medical bills of all sorts are generally considered dischargeable in a Chapter 7 bankruptcy. You must qualify for Chapter 7 bankruptcy or be exempt from the means test.

Chapter 13 bankruptcy for medical bills

Chapter 13 bankruptcy has two unique characteristics, compared to Chapter 7 bankruptcy, when it comes to dealing with medical issues.

First off, typically, if a person has missed work, even lost their job, due to medical problems, he may also be behind on a car or house payment. Under most circumstances, Chapter 13 bankruptcy may work well to catch up those payments.

Secondly, if a person is not dealing with a past-due house or car payment, and those items are either current or paid off, he may want to consider filing a Chapter 13 bankruptcy if he is not certain whether additional substantial medical bills may be incurred in the near future. Once his medical situation is stable, he may be able to convert to a Chapter 7 bankruptcy later.

If a Chapter 13 bankruptcy is filed and then later converted to a Chapter 7 bankruptcy, new medical bills incurred after the filing of the Chapter 7 bankruptcy but before the date of conversion may become dischargeable as well.

Consulting with a bankruptcy attorney regarding your specific situation is critical. The attorney can help direct you in choosing Chapter 7 or Chapter 13 bankruptcy depending on what will work best for you.

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