If you are wondering that Can you file bankruptcy on medical bills, the answer is yes. You can file bankruptcy on medical bills. In fact, it’s one of the most common types of debt included in bankruptcy cases in the U.S. Medical bills are considered unsecured debts, which means they are not backed by any collateral like your house or car. Because of this, they can usually be discharged (wiped out) through the bankruptcy process.
If you’ve been hit with massive hospital bills after surgery, emergency room visits, or ongoing treatments, you’re not alone. Every year, thousands of Americans face bankruptcy simply because they couldn’t afford necessary healthcare. Even with insurance, unexpected costs, high deductibles, or denied claims can lead to unbearable financial pressure.
So, if you’re wondering whether filing for bankruptcy is the right step to take, this guide will walk you through everything you need to know—legally, financially, and emotionally.
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What Does It Mean to File Bankruptcy on Medical Bills?
When people say they’re “filing for medical bankruptcy,” they’re actually referring to filing personal bankruptcy—either Chapter 7 or Chapter 13—to discharge their medical debts. There is no separate type of bankruptcy for medical issues, but medical debt qualifies just like other unsecured debts.
By filing bankruptcy, you are asking the court to either forgive your debt completely or allow you to pay it off over time under court supervision. In most cases, people file because they simply cannot keep up with the bills, interest, and collection calls, even after trying to negotiate or apply for assistance.
Types of Bankruptcy That Cover Medical Debt
Most individuals file either Chapter 7 or Chapter 13 bankruptcy. Both allow for the inclusion of medical bills, but they work very differently depending on your income, assets, and long-term goals.
Chapter 7 Bankruptcy
This is the most common type filed for medical debt. It’s also known as liquidation bankruptcy.
- It’s typically for people who earn below the state median income.
- Medical debt, credit cards, and other unsecured debts are usually completely eliminated.
- The process takes about 3 to 6 months.
- You may have to give up non-exempt assets, but most filers don’t lose anything due to exemptions.
Chapter 7 works best for people who have little to no disposable income and want a quick, fresh start.
Chapter 13 Bankruptcy
This is also called reorganization bankruptcy and is used by people with a regular income.
- It lets you create a court-approved repayment plan that lasts 3 to 5 years.
- You pay a portion of your medical bills based on your ability to pay.
- You keep all of your assets, including your home and car.
- It stops foreclosure, repossessions, and lawsuits.
Chapter 13 is ideal if you want to protect property and pay your debts over time.
Why Medical Debt Is Dischargeable in Bankruptcy
Medical bills fall under the category of unsecured debt, similar to:
- Credit card debt
- Personal loans
- Utility bills
- Payday loans
Since these debts are not tied to a physical asset, bankruptcy law allows them to be wiped out or reduced under both Chapter 7 and Chapter 13. This is different from secured debts like mortgages or auto loans, which are backed by your property and treated differently in court.
Importantly, there is no limit to the amount of medical debt you can discharge. Whether your bills total $5,000 or $500,000, you’re still legally allowed to include them in your bankruptcy filing.
What Happens to My Credit Score After Filing?
Bankruptcy will impact your credit score. That’s unavoidable. However, the severity depends on your current credit health. If you’re already missing payments, facing collections, or being sued over unpaid bills, your credit is already damaged. Bankruptcy might actually give you a path to start rebuilding.
Here’s what to expect:
- A Chapter 7 filing stays on your credit report for 10 years.
- A Chapter 13 filing stays for 7 years.
- You may initially lose 100–200 points, but the score begins to recover within 12–24 months.
Many people begin rebuilding their credit by using secured credit cards, small installment loans, and consistent on-time payments after their bankruptcy is discharged.
Can You File Bankruptcy on Just Medical Bills?
Technically, no. When you file for bankruptcy, you’re required to list all your debts, not just the medical ones. That includes:
- Credit cards
- Personal loans
- Old utility bills
- Overdue rent
- Any other debts you owe
So, while your main concern might be your medical bills, the court will look at your entire financial picture. The good news is: all eligible unsecured debts can usually be discharged or reduced along with your medical debt.
When Should You Consider Filing Bankruptcy on Medical Debt?
Filing for bankruptcy is a major financial decision, but in some situations, it might be your best or only option.
Here’s when it makes sense to consider it:
- You owe more in medical bills than you earn in a year.
- You’ve already tried negotiating, applying for assistance, or setting up payment plans, but still can’t manage.
- You’re being harassed by debt collectors, sued, or facing wage garnishment.
- You have no realistic path to repay the debt within five years.
- Your health or personal life is being affected by the financial stress.
In these cases, bankruptcy may provide the relief and reset you need.
Alternatives to Filing Bankruptcy
Before you file, it’s smart to look at your other options. Some patients are able to settle their medical bills or even get them forgiven entirely.
Here’s a quick list of alternatives:
- Negotiate with providers – Many hospitals offer discounts for uninsured patients or cash payments.
- Ask about charity care or financial aid – Non-profit hospitals are legally required to provide assistance in many states.
- Set up a no-interest payment plan – Often better than maxing out your credit cards.
- Work with a medical billing advocate – These professionals understand coding and pricing errors and can help reduce your bills.
- Consider debt consolidation – Combining debts into a single monthly payment may help, but be careful of high-interest loans.
These options may not always solve the problem completely, but they could reduce the amount you owe or make payments more manageable.
Pros and Cons of Filing Bankruptcy on Medical Bills
Like every major decision, there are upsides and downsides to consider.
Pros:
- You can legally eliminate overwhelming medical debt.
- All collection efforts, lawsuits, and wage garnishments stop immediately.
- You get a fresh financial start, free from mounting bills.
- You may also discharge other unsecured debts, simplifying your finances.
- The emotional relief can be significant—less stress, better sleep, and more control.
Cons:
- Bankruptcy damages your credit score and appears on your report for several years.
- You may need to pay legal fees and attend court hearings.
- You’ll be required to complete credit counseling before and after filing.
- Some non-dischargeable debts, like student loans or back taxes, may still remain.
- Not all assets may be protected depending on your state laws.
Understanding both sides helps you make an informed choice.
How to Start the Bankruptcy Process
Filing bankruptcy isn’t something you have to do alone. Here’s how to begin:
- Consult a bankruptcy attorney – Most offer free initial consultations and can explain your options.
- Collect your financial records – Include medical bills, income statements, and a list of all debts.
- Complete credit counseling – Required by law before you file.
- File your bankruptcy petition – Your lawyer handles this and guides you through the paperwork.
- Attend a creditors’ meeting – A short court appearance where the trustee reviews your case.
- Complete a post-filing financial management course – Also required.
- Get your discharge – Your eligible debts are eliminated or restructured, depending on the chapter.
From start to finish, the process can take a few months or a few years, depending on the chapter you file under.
Final Thoughts: Can You File Bankruptcy on Medical Bills?
Yes, you can file bankruptcy on medical bills, and for many Americans, it’s a necessary step to regain financial control. Whether you’ve experienced a medical emergency, a chronic illness, or simply can’t keep up with healthcare costs, bankruptcy may offer a clean slate.
Still, it’s not a decision to rush into. Consider your total debt, explore all alternatives, and speak with a professional who understands the law and your personal goals. What matters most is taking action to protect your future—and your peace of mind.
FAQs
Q1. Can medical debt really be erased through bankruptcy?
Yes, medical debt is usually eligible for discharge under both Chapter 7 and Chapter 13 bankruptcy.
Q2. Will I lose my home if I file bankruptcy on medical bills?
Not necessarily. Many states offer homestead exemptions that protect your home, especially under Chapter 13.
Q3. Is it expensive to file for bankruptcy?
There are filing fees and attorney fees involved, but many lawyers offer payment plans or sliding scales.
Q4. Can I file bankruptcy even if I have insurance?
Yes. Even with insurance, out-of-pocket costs and uncovered services can lead to major debt that qualifies for bankruptcy.
Q5. How long does bankruptcy take to complete?
Chapter 7 usually takes 3 to 6 months. Chapter 13 involves a 3 to 5 year repayment plan.
