Can You File Bankruptcy on Medical Bills?

FAQ: Can you file bankruptcy on medical bills? 

Yes, medical debt is usually considered unsecured debt, and for the right person, it may offer an effective path forward when medical costs spiral out of control. In many cases, medical debt may be eligible for discharge in bankruptcy, similar to credit card or personal loan debt. This applies even if the bills are old or already in collections. 

According to the Kaiser Family Foundation, roughly 41% of adults in the U.S. carry some form of medical or dental debt. 

One of our clients, for instance, suffered a sudden stroke and had medical bills that were close to $100,000. Facing aggressive collection calls and mounting stress, she chose to file bankruptcy and finally got relief.

So can you file bankruptcy on medical bills? The answer is yes, and it can be the most effective solution when medical costs spiral out of control, especially after a health crisis you didn’t see coming.

FAQ: Why is medical debt one of the leading causes of bankruptcy in the U.S.?

Medical debt is one of the leading causes of bankruptcy in the U.S. because a single medical event can snowball into a financial disaster, especially for families living paycheck to paycheck. According to a KFF Health Care Debt Survey, one in four Americans who have healthcare debt owe more than $5,000, and one in five Americans who have healthcare debt say they don’t expect to ever pay it off.

Medical emergencies tend to trigger a chain reaction: missed work, reduced income, and increased interest on other unpaid bills that, as a result, are sent to collections after the medical emergency. Even people who were previously managing their finances can find themselves overwhelmed when income drops and expenses spike at the same time.

And insurance doesn’t always protect against this spiral. High deductibles, out-of-pocket maximums, out-of-network charges, and denied claims often leave patients with far more financial responsibility than they expected. In fact, among adults with health insurance, nearly 1 in 10 still carry significant medical debt.

As a result, many people end up using credit cards, personal loans, or retirement funds just to stay afloat, only to find themselves deeper in debt with no way out. This is often when people start asking, “Can you file bankruptcy on medical bills?”

FAQ: What counts as “medical debt”?

Medical debt includes any expense related to health care, such as ER visits, surgeries, ambulance rides, hospital stays, dental procedures, mental health treatment, and follow-up care like physical therapy or lab work. If you received care for a medical issue and were billed for it, it likely counts as medical debt, even if the bill is from a third-party provider like an anesthesiologist or a lab.

Many people are surprised to learn that even old medical bills can still be included in a bankruptcy filing. It doesn’t matter if the bill has gone to collections or if you’ve already tried negotiating. If the medical debt is considered unsecured (not tied to collateral), it may qualify for discharge under Chapter 7 or be addressed through a repayment plan in Chapter 13, depending on the case.

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This matters because of how medical billing works in the U.S. A single procedure might generate multiple bills from different providers, often arriving weeks or months apart. That delay and confusion can lead to missed payments, and once those bills hit collections, the financial damage starts to snowball, especially for families without savings to cushion the blow.

For some people, bankruptcy may be a path to regaining control of their finances, especially when other options have been exhausted.

FAQ: What can I do if I get a surprise medical bill?

Surprise medical bills are often the result of balance billing, which happens when a provider charges you the difference between what they billed and what your insurance covered. But thanks to the No Surprises Act (officially titled the Consolidated Appropriations Act, 2021, passed by Congress in December 2020) balanced billing is generally illegal. The No Surprises Act went into effect on January 1, 2022, and was designed to protect consumers from unexpected out-of-network medical charges, particularly in situations where they had little or no choice about who provided their care.

Effective January 1, 2022, the No Surprises Act protects patients from unexpected charges for:

• Emergency care at out-of-network facilities
• Non-emergency care at in-network hospitals when you’re unknowingly treated by an out-of-network provider (like an anesthesiologist)
• Air ambulance services

These protections apply to people with private insurance, including employer-sponsored plans and ACA marketplace plans.

If you receive a bill you think violates the law:

1. Request an itemized bill and compare it with your insurance Explanation of Benefits (EOB)
2. Contact your insurer and the provider to dispute the charge
3. You can file a complaint or dispute through the Centers for Medicare & Medicaid Services if you believe the bill violates the No Surprises Act

If the bill is legitimate but still unaffordable, consider asking the provider for a payment plan or hardship discount. Many hospitals also offer financial assistance programs. 

In some cases, if surprise bills accumulate or are sent to collections, bankruptcy may be one of the tools available to help address the debt.

Can you file bankruptcy on medical bills related to surprise charges? The answer may depend on the type of bill and your overall financial situation.

FAQ: How do I negotiate a medical bill?

If you’re facing unaffordable medical bills, bankruptcy isn’t your only option, but it may be the most reliable if other strategies don’t work. Before considering bankruptcy, many people explore other strategies that may help reduce or manage their debt.

You can start by requesting an itemized bill. Medical bills often contain duplicate charges or billing errors. A 2021 survey by Medliminal found that up to 80% of medical bills contain mistakes, so reviewing every line could save you money. If you find something questionable, you might want to ask for a corrected bill before paying.

Next, call the billing department and ask if they offer a cash discount or prompt-pay discount. Many providers will lower the total if you can pay a lump sum, even if it’s less than the full amount.

You can also file a hardship appeal and ask to be considered for the hospital’s financial assistance or charity care program. Nonprofit hospitals are required to have financial assistance policies and may forgive bills for patients who meet income requirements.

If the bill has already gone to collections, you may be able to settle for a lower amount, especially if you can pay quickly. It is a good idea to request any agreement in writing.

FAQ: How does medical debt affect my credit score?

Medical debt can affect your credit score, but recent rule changes have reduced the impact. As of 2023, all three major credit bureaus have agreed to:

• Remove medical debts under $500
• Wait 365 days before reporting unpaid medical bills
• Remove paid medical collections entirely

Still, large unpaid debts can hurt your score if they cross the reporting threshold. According to the Consumer Financial Protection Bureau, 43 million Americans had medical collections on their credit reports in 2021, with an average balance of over $500.

These negative marks can lower your score by 50 to 100 points or more, affecting your ability to get approved for credit cards, mortgages, or even rental applications.

For those with widespread or long-standing medical debt, bankruptcy may offer the cleanest reset, stopping future reporting and wiping out unpaid balances altogether.

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FAQ: Can I get financial assistance from the hospital instead of filing bankruptcy?

Yes, you might be able to get financial assistance from the hospital instead of filing bankruptcy, especially if your income falls below certain thresholds. This assistance is usually offered through a hospital’s charity care or financial assistance program, which may reduce or eliminate your bill entirely.

Nonprofit hospitals are required by federal law to provide financial assistance policies and to publicly post them, but many patients don’t know they exist. According to a 2022 report by the Lown Institute, millions of eligible patients are never told about charity care, and hospitals often pursue collections even when people qualify for help. Eligibility typically depends on household income and family size. For instance, programs may offer full forgiveness for patients earning under 200% of the federal poverty level and partial assistance up to 400%.

Compared to bankruptcy, charity care might be faster, less damaging to your credit, and doesn’t require legal filings. But it only applies to specific hospital bills and doesn’t cover other debts, like ambulance services, independent providers, or ongoing medical needs.

One of our clients, Teresa, qualified for partial assistance on a $12,000 hospital bill, but she still had $40,000 in other medical debts, plus credit cards she used to stay afloat while recovering. For her, bankruptcy made more sense. It cleared all her unsecured debt and gave her a clean slate, while charity care would’ve only put a dent in the problem.

FAQ: What is the difference between charity care and bankruptcy?

Charity care and bankruptcy are both forms of financial relief, but they differ in eligibility, scope, credit impact, and time frame. Charity care is typically offered by nonprofit hospitals to patients who meet income requirements (often under 200–400% of the federal poverty level). It applies only to bills from that hospital and doesn’t affect your credit. Relief can be partial or full, but it only covers specific accounts and may not help with ambulance bills, independent providers, or debt already in collections.

Bankruptcy, on the other hand, wipes out all qualifying unsecured debt, including medical, credit card, and personal loans, regardless of where it came from. It does impact your credit score, but for many, the damage has already been done.

Consider Luis: he qualified for charity care on a $7,000 hospital bill but still had $25,000 in other medical and credit card debt. Bankruptcy gave him comprehensive relief, while charity care only scratched the surface.

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Can you file bankruptcy on medical bills? Yep, and this video explains what else can be discharged during bankruptcy?

FAQ: Why do some hospitals send bills to collections so fast?

Some hospitals send bills to collections quickly due to short billing cycles, poor communication systems, and profit-driven policies. A 2023 report by the National Consumer Law Center found that many hospitals refer unpaid bills to collectors in as little as 120 days, even when patients are actively trying to resolve the debt.

Part of the problem is fragmented billing: you may receive separate invoices from the hospital, radiologist, lab, and anesthesiologist, each with its own payment window. If you miss just one, it can go to collections without warning.

Hospitals, especially those operating on thin margins, may also sell debt to collection agencies for a fraction of its value, prioritizing immediate cash over patient relationships.

If your debt has already been sold, options like payment plans may be off the table. For the right person, bankruptcy may become a powerful tool to stop collections and discharge the debt entirely, especially if multiple bills are involved.

FAQ: Should I pay a medical bill that’s in collections?

Whether you should pay a medical bill that’s in collections depends on your financial situation, the size of the debt, and the advice you get from a professional. Since July 2022, the three major credit bureaus have agreed to exclude medical debt under $500 from credit reports, and they now wait 365 days before reporting any medical collections, giving patients more time to resolve issues.

If the bill is legitimate and you can afford it, settling or paying it can protect your credit score and prevent lawsuits. But if you’re facing several collection accounts or the bill is inflated, negotiating might be a better move. You can ask for an itemized statement, verify the debt, and try to settle for less … and be sure to get any agreement in writing.

FAQ: What is the statute of limitations on medical debt?

The statute of limitations on medical debt varies by state, typically lasting 3 to 6 years. Once that time passes, creditors can no longer sue you to collect, though the debt still exists, and collectors may continue to contact you.

Timing matters. If you make a payment or acknowledge the debt in writing, the clock can restart, resetting the statute and reopening the window for legal action. Here’s an example that may help explain this concept …

Jasmine received a $1,800 hospital bill after an emergency room visit in 2018. She never paid it, and by 2022, the statute of limitations in her state was nearly up. But in early 2023, she called the collection agency to discuss a possible payment plan and agreed to send in $100. That payment restarted the clock on the statute of limitations, giving the collector another full term to sue her, even though she was only months away from being legally protected.

You can check your state’s statute of limitations here.

If you’re unsure whether a debt is time-barred, or if multiple bills are piling up, bankruptcy may offer broader and safer protection, eliminating old and new medical debt in one filing.

FAQ: Can I be sued over medical debt?

Yes, you can be sued over medical debt, and lawsuits are becoming more common. A 2022 JAMA study found that more than 20% of lower-income patients at nonprofit hospitals had lawsuits filed against them for unpaid bills, despite many qualifying for financial assistance.

If you’re sued, you’ll receive a court summons and have a limited window to respond, often just 20–30 days. Ignoring the suit could result in a default judgment, which may lead to wage garnishment or a lien on your property.

Filing for bankruptcy halts all lawsuits immediately through a legal mechanism called the automatic stay, giving you a chance to regroup without fear of losing income or assets.

Press Play: What Is an Automatic Stay? 

FAQ: Does bankruptcy stop medical debt collectors from calling me?

Yes, bankruptcy immediately stops all medical debt collection calls through a legal protection called the automatic stay. This stay goes into effect the moment your bankruptcy case is filed with the court, and it requires all creditors and collection agencies to halt their efforts, including phone calls, letters, emails, wage garnishments, and even lawsuits.

The automatic stay is a federal court order. Violating it can carry serious penalties for collectors, which means they take it seriously. If a collector contacts you after you’ve filed, you can report it to your attorney or the court, and they may be held liable for damages.

This legal pause gives you breathing room to gather your finances, review your options, and move through the bankruptcy process without the constant emotional toll of harassment. It also helps prevent aggressive actions like lawsuits and bank levies that could otherwise escalate your financial situation.

The automatic stay typically lasts until your bankruptcy case is closed or discharged. In rare cases, such as repeated filings within a short period, a creditor may request the court to lift the stay, but this is uncommon and must be approved by a judge.

Once your bankruptcy is discharged, your medical debts are legally erased, and collectors have no grounds to pursue you further. The automatic stay transitions into permanent relief, offering not just peace of mind but a clear legal resolution to unmanageable medical debt.

FAQ: How soon after a medical emergency can I file for bankruptcy?

You can file for bankruptcy shortly after a medical emergency, but it’s best to wait until all bills have arrived, unless you’re facing immediate collection actions like lawsuits or wage garnishment.

Medical billing often happens in waves. A single ER visit may result in separate bills from the hospital, lab, radiologist, and ambulance service. Filing too early could leave out some debts, and those won’t be dischargeable later.

That said, if the financial pressure is immediate, calls, lawsuits, or debt collectors threatening your assets, it may be better to file quickly and get relief. If you’re unsure when to file, consulting with a bankruptcy attorney can help you time it for maximum protection and the cleanest slate possible.