Can bankruptcy get rid of medical debt?

Why it discharges so cleanly

The law treats medical bills as ordinary unsecured debt, the same category as credit cards. Congress’s list of debts that survive bankruptcy (taxes, support, student loans, fines, fraud) says nothing about medical care. So hospital bills, surgeon bills, ambulance rides, lab work, and the credit card you used to pay a deductible are all discharged in full.

A few things follow from that:

• Size doesn’t matter. A $300,000 surgery bill discharges exactly the same way a $500 urgent care bill does.
• Collections and judgments don’t change it. A medical bill that has been sold to a collector, or even reduced to a court judgment and garnishing your wages, is still dischargeable, and filing stops the garnishment.
• Cosigned bills are shared. If a spouse or parent also signed for the treatment, your discharge protects you, not them. Their responsibility for the bill continues unless they file too.

If you’re still being treated

The discharge wipes out bills for care you already received. It does not obligate any provider to keep treating you, and people reasonably worry about their relationship with a doctor they still need. In practice, hospitals cannot refuse emergency care, and most large providers separate billing from treatment entirely. If you are in ongoing treatment with a small independent practice you owe money to, that is worth raising with an attorney before filing, because timing and communication can matter.

The trap to avoid

Don’t drain retirement accounts or take out home equity to pay medical bills before understanding your options. Retirement accounts are almost always fully protected in bankruptcy, so paying a dischargeable bill with protected money is paying with dollars you were entitled to keep. It is one of the most expensive mistakes people make on the way to filing, and it usually happens before they’ve talked to anyone.

The bottom line

If medical debt is a major part of what you owe, bankruptcy handles it about as well as it handles anything. The harder question is usually everything else attached to it: the income lost during an illness, the mortgage that fell behind. Those are the situations the rest of this Library, and the BK Checkup, are here to help you sort out.