Occasionally, I am asked about a “medical bankruptcy.” “Medical bankruptcy,” or a special type of bankruptcy solely for medical bills, simply does not exist. Medical debt, however, is easily eliminated through both a chapter 7 bankruptcy and chapter 13 bankruptcy as general unsecured debt.
Medical debt is a huge factor for people who consider bankruptcy. With skyrocketing healthcare costs, bankruptcy cases that I file often contain a good portion of medical debt. But clients generally have two options when filing bankruptcy, a chapter 7 bankruptcy or a chapter 13 bankruptcy. There is no carve-out in the bankruptcy code for a “medical bankruptcy,” though, as medical bills are covered in both chapter 7 and chapter 13 bankruptcy cases.
Chapter 7 bankruptcy, as discussed in earlier posts, is a liquidation bankruptcy and lasts about 90 days. Most debts, including medical bills will be discharged as part of the bankruptcy process. Chapter 13, or “wage-earner’s” bankruptcy, where a client makes monthly payments for 3-5 years, covers medical debt as well.
Therefore, “medical bankruptcy” is a myth in terms of a special type of bankruptcy. However, medical debt is included as a dischargeable debt in both chapter 7 bankruptcy and chapter 13 bankruptcy.
If you are interested in learning more about bankruptcy and how medical debt may be eliminated through bankruptcy, please contact me for a free in-office bankruptcy consultation.