Can Bankruptcy Get Rid of Medical Bills?
Short answer, YES.
Medical debt is one of the leading reasons people in Michigan consider bankruptcy. A sudden illness, unexpected surgery, or ongoing medical treatment can quickly create overwhelming bills, even for individuals with health insurance. The good news is that, in many cases, bankruptcy can eliminate medical debt and provide a fresh financial start.
Medical bills are generally considered unsecured debt, meaning they are not backed by collateral like a home or vehicle. Because of this, they are often fully dischargeable in both Chapter 7 and Chapter 13 bankruptcy cases.
In a Chapter 7 bankruptcy, qualifying individuals may be able to eliminate most or all of their medical debt in just a few months. Once the bankruptcy court grants a discharge, creditors can no longer attempt to collect the discharged medical bills. This means no more collection calls, lawsuits, wage garnishments, or threatening letters related to those debts.
For individuals who do not qualify for Chapter 7, Chapter 13 bankruptcy can also provide significant relief. Chapter 13 allows debtors to reorganize their finances through a court-approved repayment plan lasting three to five years. In many cases, only a portion of the medical debt is repaid, with any remaining eligible balance discharged at the end of the plan.
One common misconception is that bankruptcy can only help if medical bills are the sole financial problem. In reality, bankruptcy addresses your entire financial picture. Credit card debt, personal loans, unpaid utility bills, and certain other unsecured debts can often be discharged alongside medical expenses. This comprehensive approach can make it easier to regain financial stability.
Filing bankruptcy may also stop pending lawsuits over unpaid medical bills. If a creditor has already sued you or is threatening wage garnishment, the automatic stay that goes into effect upon filing bankruptcy can halt most collection actions immediately.
It is important to understand that bankruptcy does not eliminate every type of debt. Certain obligations, such as most student loans, recent tax debts, child support, and alimony, generally remain payable. An experienced bankruptcy attorney can help determine which debts can be discharged in your specific situation.
If medical bills have become unmanageable, you do not have to face the burden alone. At Russell Law Firm, PC, we help Michigan families explore their options and determine whether bankruptcy is the right solution for their financial circumstances. A consultation can help you understand your rights and develop a plan to move toward a debt-free future.