What Happens to Medical Debt in a Bankruptcy Case?

Georgia attorney helps people break free from outstanding healthcare bills

Even with insurance, a health crisis can put enormous financial pressure on your shoulders at a time when you are least equipped to handle it. Heavy medical bills can contribute to making your consumer debt seem insurmountable. A bankruptcy attorney at Jeff Field & Associates can help you understand your legal options and take meaningful steps toward relief. We have more than three decades of experience helping people throughout Georgia achieve a fresh financial start.

Do most bankruptcies involve medical debt?

Research from national healthcare and consumer finance studies shows that medical expenses contribute to a large percentage of personal bankruptcy cases. Many households face such issues as: 

• High deductibles and copays
• Lost wages during recovery
• Ongoing prescription expenses
• Collection lawsuits from healthcare providers
• Credit card balances used to cover treatment costs

Medical debt can affect families from every income level. A sudden illness or accident may quickly create financial pressure that becomes difficult to manage without legal assistance. 

Can medical debt be discharged during bankruptcy?

Both Chapter 7 and Chapter 13 bankruptcy may provide relief from medical debt, depending on a person’s financial situation.

Chapter 7 bankruptcy allows qualified individuals to fully eliminate debt connected to hospital visits, surgeries, emergency care, prescriptions and other medical expenses. Once the bankruptcy process is completed, debt collectors can no longer pursue those discharged balances. 

Chapter 13 bankruptcy works differently. Instead of fully wiping out debt immediately, the debtor enters into a repayment plan that usually lasts three to five years. At the end of the repayment period, remaining eligible medical debt may be discharged. 

Are there any situations where medical debt might not be discharged?

Although most medical debt qualifies for discharge in bankruptcy, there are situations where repayment could still be required. The outcome often depends on the type of bankruptcy case filed and the circumstances surrounding the debt. Examples include: 

• Medical debt that is included in a Chapter 13 repayment plan
• Fraud-related claims connected to medical financing applications
• Debts tied to luxury healthcare procedures financed shortly before filing
• Court objections raised by creditors regarding certain charges

Additionally, if a creditor claims that the debtor intentionally provided false information when applying for medical financing, the court may review whether that debt qualifies for discharge. A bankruptcy attorney can evaluate these concerns early and help you avoid costly mistakes before filing. 

Is bankruptcy the only way to eliminate medical debt?

Bankruptcy is not the only option available. You may qualify for alternative forms of medical debt relief depending on your financial condition. Other possible solutions include:

• Negotiating reduced balances with hospitals or providers
• Setting up structured payment arrangements
• Applying for hospital financial assistance programs
• Consolidating debt into lower-interest repayment options
• Working with creditors to settle certain accounts

However, these solutions may not fully resolve serious financial hardship when debt levels continue to rise faster than payments can be made. Bankruptcy may provide broader legal protections than other programs can offer. 

Can medical debts still be pursued by creditors once you file bankruptcy?

An automatic stay goes into effect immediately when a bankruptcy petition is filed. It prevents most creditors from continuing collection efforts while the bankruptcy case remains active. That means that medical debt collectors generally cannot:

• Call to demand payment
• Send collection letters
• File lawsuits
• Garnish wages
• Continue active court actions related to the debt

If creditors continue pursuing payment after receiving notice of the bankruptcy filing, the court may impose penalties against them.

Let us help you find a practical path out of your debt

At Jeff Field & Associates, we will help you understand how bankruptcy laws apply to your financial situation and what steps may help you move forward. We have offices located in Bogart, Douglasville, Gainesville, Lawrenceville, Marietta and Decatur, Georgia. Call 404-381-1278 or contact us online to book a free initial appointment.