Medical debt is often unexpected, urgent and stubborn. If it has taken over your finances, bankruptcy might seem like a lifeline. The real question is whether it can clear your medical balances and what the process means for everything else you owe.
What medical debts qualify for discharge?
Bankruptcy treats medical debt as unsecured debt, similar to credit card bills. Most medical expenses qualify for discharge in bankruptcy, such as:
- Hospital bills and emergency room charges
- Doctor and specialist fees
- Surgery and procedure costs
- Prescription medication bills
- Medical equipment and supplies
- Ambulance services
- Dental and vision care expenses
- Mental health treatment costs
While rare, some medical debts might survive bankruptcy if you secured them with collateral or incurred them through fraud. Some obligations also do not qualify for discharge, such as most recent taxes, domestic support obligations and certain fines. You also cannot wipe out new bills that arise after you file. If you anticipate further treatment, timing your case matters.
Chapter 7 vs. Chapter 13
There are two main types of personal bankruptcy: Chapter 7 and Chapter 13. Each has different rules for handling medical debt.
Chapter 7 bankruptcy, also known as liquidation bankruptcy, allows you to wipe out most unsecured debts. If you qualify, your nonexempt assets might be sold to pay creditors. Many common assets are exempt, meaning you can keep them.
Chapter 13 bankruptcy, or reorganization bankruptcy, is for people with a regular income. You create a repayment plan to pay back some of your debts over three to five years. Any remaining unsecured medical debt is typically discharged after you complete the plan. This option can be helpful if you do not qualify for Chapter 7 or want to protect certain assets.
The automatic stay
Upon filing for bankruptcy, the court issues an automatic stay. This provision immediately stops collection calls, lawsuits, wage garnishments and billing. It also prevents hospitals or clinics from sending your account to collections.
The stay gives you breathing room while your case moves forward. Creditors must respect it or face penalties.
Take action today
Medical debt does not disappear on its own, and collection actions only get worse with time. You do not need to figure this out alone. Speak with a Louisiana bankruptcy attorney who can review your full picture, explain your options and help you protect your income, your home and your peace of mind.