Medical debt is a financial burden for many people, often resulting from unexpected illnesses or injuries. When faced with overwhelming medical bills, some may consider bankruptcy as a potential solution.
However, it is important to understand whether bankruptcy can discharge medical debt and what factors may influence the outcome.
Types of bankruptcy
There are two primary types of consumer bankruptcy: Chapter 7 and Chapter 13. In Chapter 7 bankruptcy, most unsecured debts, including medical bills, may undergo discharge entirely, leading to a fresh financial start. On the other hand, Chapter 13 bankruptcy involves a repayment plan over three to five years, during which some debts, including medical bills, may undergo partial discharge based on the individual’s ability to pay.
Dischargeability of medical debt
Under both Chapter 7 and Chapter 13 bankruptcy, medical debt is an unsecured debt. As such, medical debt is eligible for discharge in bankruptcy proceedings. However, certain factors, such as fraudulent behavior related to medical expenses or debts incurred shortly before filing for bankruptcy, may impact the dischargeability of medical debt.
Considerations and limitations
While bankruptcy can provide relief from medical debt, it is important to consider the potential consequences. Filing for bankruptcy can have a significant impact on credit scores. It may also remain on credit reports for several years, affecting future financial opportunities. Additionally, not all medical expenses may be dischargeable. This is particularly true if the expenses were the result of elective procedures or if the debtor has sufficient income to repay the debts.
Bankruptcy can offer a pathway to discharge medical debt and alleviate financial distress for those facing overwhelming medical bills. Consulting with a financial advisor or bankruptcy professional can give debtors the guidance they need to make informed decisions about managing medical debt.