Medical debt is the reason for a vast majority of bankruptcy cases, and it is generally treated like any other unsecured debt.
Whether or not you pay any portion of medical debt after bankruptcy approval depends on the type of bankruptcy you file. Chapter 7 and Chapter 13 are the most common.
Medical debt in a Chapter 7 bankruptcy
A Chapter 7 bankruptcy is for anyone who cannot pay their debts but does not have property or assets to sell so they can pay. Sometimes, you may have assets, but they are exempt from consideration. If you can prove your income is only enough or less than enough to pay your monthly bills and leave no excess, you can likely file a Chapter 7 and wipe your debt clean, including all medical debt.
Medical debt in a Chapter 13 bankruptcy
A Chapter 13 bankruptcy is for those who can afford to pay back a portion of their debt but not all of it. When you file for a Chapter 13 bankruptcy, you agree to a repayment plan, typically lasting no less than three years and no more than five. Your medical debt would likely be part of that repayment plan. However, you would only repay a fraction of it before the plan ends, wiping out all the remaining debt, including your medical debt.
If you need to file bankruptcy because of compounding debt, both Chapter 7 and Chapter 13 are viable options. Which are available to you depends on your assets and income.
