Can I File for Bankruptcy for my Medical Bills?

Medical bills can be the kiss of death for a budget, so it’s no wonder that it’s the most common cause of filing bankruptcy. No one expects a major medical expense, so if your savings account isn’t prepared you can quickly go into debt. If your medical bills are starting to stack up, you may be unsure what to do next. For many, choosing to file bankruptcy may be their only way out. 

If you’re unsure what to do about your medical bills, look no further. Let’s discuss the benefits of filing for bankruptcy and what it means for your financial future. 

How does medical bankruptcy work?

First, a point of order: there is no such thing as medical bankruptcy. You cannot choose what areas of debt you would like to have removed. Once you file for bankruptcy, that will include all of your debt, whether you want it to or not. 

When you file for bankruptcy, you will usually be given the choice of filing for Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankruptcy has income limits and eliminates all debt, while Chapter 13 bankruptcy has no income limits and allows you to repay a smaller sum of your debt and have the remainder forgiven after a period of time. Discuss with your bankruptcy attorney which would be the best for you. 

When you file for bankruptcy, not all of your debts may be discharged. It’s important to understand that there are multiple types of debt, and some of them are unable to be discharged. For example, recent overdue taxes, alimony, child support and student loans all fall under the category of debts that cannot be discharged. Luckily for you, medical debt is fully dischargeable. This also includes medical debt that you may have paid on a credit card. If you have multiple types of debt, you may need to consider all of your options. 

What are some of my other options?

For some, filing bankruptcy may be an unappealing choice. For instance, if you plan to buy a house in the next decade, it may become difficult if you file for bankruptcy. The good news is you may have a bit more leniency with your medical debt than with other types of debt. If you can’t file for bankruptcy, consider these options: 

  • Negotiate your bill. While you can’t call up your student loan servicer and negotiate on paying your debt, you usually can with medical bills. If you can make a case for paying a portion of the bill, they may be able to forgive the remainder. You can also check your bill for any errors and discuss removing these errors from the bill. 
  • Ask about assistance programs. Depending on your income, you may be eligible for a medical assistance program that will help you pay your medical bills. Ask the hospital if they offer this program. If not, they may be able to direct you to a program that does. 

Are you considering filing for bankruptcy to get rid of your medical debt?

Contact Reynolds & Gold. We can walk you through the process of filing for bankruptcy and make sure you understand the process inside and out.