Medical debt is one of the most common reasons people consider bankruptcy — and one of the most unfair.
You can do everything “right” in life and still end up drowning in bills because of:
- an emergency surgery
- a complicated pregnancy
- a chronic illness diagnosis
- an ER visit that turned into a $20,000 surprise
- out-of-network charges you never agreed to
So here’s the question people ask all the time:
Can bankruptcy wipe out medical bills — even if they’re already in collections?
In most cases, yes.
And for many people, it’s one of the most effective ways to get their financial life back under control.
Let’s break down how it works.
First: Medical Bills Are Usually “Unsecured Debt”
Medical bills are almost always classified as unsecured debt, meaning they are not tied to collateral like a home or car.
Unsecured debt generally includes:
- medical bills
- credit cards
- personal loans
- old utility bills
- collection accounts
- many lawsuit judgments
And here’s the key:
Unsecured debt is exactly what bankruptcy is designed to eliminate or restructure.
Chapter 7: The Fast Medical Debt Wipeout
If you qualify for Chapter 7, it can be the quickest way to eliminate medical debt.
What Chapter 7 typically does:
✅ wipes out eligible medical bills
✅ stops collection calls and letters
✅ ends lawsuits and garnishments
✅ prevents new collection actions during the case
Many Chapter 7 cases are completed in roughly 3–4 months, and most filers do not repay medical creditors.
“But the bill is already in collections…”
That doesn’t change the analysis.
Whether your medical bill is held by:
- the hospital
- a billing company
- a debt buyer
- a collection agency
- a law firm collection department
…it’s still usually dischargeable in bankruptcy.
Chapter 13: When You Need a Payment Plan (But Still Want Relief)
Not everyone qualifies for Chapter 7.
If you have higher income or valuable assets you need to protect, Chapter 13 may be the better route.
Chapter 13 can still help tremendously with medical debt by:
- consolidating payments into one monthly plan payment
- stopping lawsuits and garnishments
- reducing what you pay to unsecured creditors (often significantly)
In many Chapter 13 cases, medical creditors receive only a portion of what is owed — and the rest is discharged at the end of the plan.
What If the Hospital Sues Me Before I File?
That’s another question people ask — and it’s a great one.
If you file bankruptcy, the lawsuit must stop.
Once a bankruptcy is filed, an automatic federal injunction called the automatic stay goes into effect.
That means:
- lawsuits must pause
- wage garnishments must stop
- bank account levies must stop
- collection activity must stop
Even if the case is already in court.
What if they already got a judgment?
Still usually dischargeable.
A judgment for medical debt is still medical debt — it just has a court stamp on it.
Can Medical Debt Ever Not Be Dischargeable?
Most medical debt is dischargeable, but there are a few situations where things get complicated:
1) If the bill is tied to fraud
Example: someone used a fake identity or intentionally submitted false information.
That’s rare — but it’s a bankruptcy issue.
2) If it’s really something else
Some debts people think are “medical bills” aren’t medical bills.
For example:
- credit card debt used to pay for medical care = still dischargeable, but treated as credit card debt
- medical financing loans (CareCredit, etc.) = dischargeable, but may have different terms and lawsuit timelines
3) If you want to keep a specific payment arrangement
Some people are on a negotiated payment plan and don’t want to disrupt it.
But if you’re already behind and it’s not sustainable, bankruptcy may be the cleanest solution.
The Hidden Benefit: Bankruptcy Stops the Stress Cycle
Medical debt is brutal not just financially, but emotionally.
It creates a loop:
- collection calls
- credit score damage
- anxiety
- inability to qualify for loans
- fear of answering the phone
- stress in the household
Bankruptcy often gives people the ability to breathe again — and focus on health and stability.
Important: Don’t Drain Retirement or Skip Rent to Pay Medical Bills
This is the part I tell clients plainly:
Medical providers can’t repossess your health.
But if you destroy your finances trying to pay impossible bills, the consequences can last years.
Before you:
- empty your 401(k)
- stop paying your mortgage
- max out credit cards
- borrow from family
- take out payday loans
…it’s worth speaking with a bankruptcy attorney.
Because medical debt is one of the debts bankruptcy handles best.
Bottom Line: Yes, Bankruptcy Can Usually Eliminate Medical Bills
If you’re overwhelmed by medical debt, bankruptcy may:
✅ wipe it out completely (Chapter 7)
or
✅ reduce it dramatically and stop collections (Chapter 13)
And if your bills are already in collections or court, bankruptcy can still help — sometimes immediately.
