What About Medical Bills in Bankruptcy?

If you’re going through bankruptcy, you may be wondering about your medical bills. Can medical bills be discharged in bankruptcy? In most cases, the answer is yes. If you’re filing Chapter 7, your medical bills will typically be discharged. However, if you’re filing Chapter 13, you will be required to follow a three to five year repayment plan in order to get your medical bills discharged.

The percentage of your medical debt that must be repaid under Chapter 13 varies depending on a variety of factors, including monthly disposable income, non-exempt assets, and the total amount of priority debt. Some Chapter 13 filers will have to pay very little of their medical bills – while others may have to pay more.

If you have large medical bills and are considering bankruptcy, you are certainly not alone. According to a study published by the Commonwealth Fund, a research and public policy organization, 29 million Americans (14% of all adults) are in serious medical debt. Many of these individuals have put large medical bills on their credit cards, taken out second mortgages, or are negotiating a repayment plan with their hospital or medical provider.

Large medical bills are one of the leading causes of bankruptcy filings, regardless of whether or not you have insurance. According to a 2007 study conducted by Harvard University, large medical bills and healthcare costs were the main reason for up to 62% of all bankruptcies. U.S. residents filing for bankruptcy with private insurance had unpaid health care costs that averaged $17, 749. In comparison, bankruptcy filers without health care coverage had an average of $26,971 in unpaid medical bills. The study also found that bankruptcy caused by large medical bills increased 2,200 percent between 1981 and 2001. Medical bills are typically unsecured debt, and unsecured debt is usually one of the easiest types of debt to eliminate in a Chapter 7 bankruptcy.