Can personal bankruptcy discharge my medical debt?

On Behalf of | Apr 17, 2023 | Bankruptcy

Are medical bills giving you sleepless nights? You are not alone. Medical conditions like heart disease, diabetes and cancer can cost thousands of dollars to treat. If you are caught up in a staggering medical debt that you can’t seem to pay, you need to figure out your options.

Medical debt is one of the leading drivers of personal bankruptcies in the U.S. In fact, medical debt accounts for over 65 percent of personal bankruptcies. But before taking this route, you need to understand the type of personal bankruptcy you can use to discharge your medical debt. 

Chapter 7 vs. Chapter 13 bankruptcies

If you are struggling with personal debt, you can file for either Chapter 7 or Chapter 13 bankruptcy. Chapter 7 liquidates your assets and utilizes the resulting finances to pay off your debts. Chapter 13, on the other hand, lets you restructure your debt so you can repay all or part of it over time. 

Since medical bills fall under the unsecured debts category, the most appropriate type of bankruptcy you can use to discharge this type of debt is Chapter 7 bankruptcy. When you opt for Chapter 7 bankruptcy, all past unpaid medical debts will be discharged. However, do keep in mind that any new bills that come up after filing will not be part of the bankruptcy. Thus, you will have to pay such debts. 

What information do you need to disclose when filing for Chapter 7 bankruptcy?

Bankruptcy laws are intended to be fair to both parties (debtors and creditors). As such, the process of declaring bankruptcy involves disclosing your financial information — your income and expenses, assets and debts as well as any property transfers. It is imperative that you are as truthful as possible. Any false information can jeopardize your bankruptcy claim. 

Safeguarding your rights

A fresh start is possible if you are unable to pay your medical bills. Learning more about Chapter 7 bankruptcy and how it works can help you protect your rights and interests while discharging your medical debt through bankruptcy.