Medical Debt Is Fully Dischargeable
Medical debt is unsecured debt that is fully dischargeable in Chapter 7 bankruptcy. There is no limit to the amount of medical debt you can eliminate. Whether it is $5,000 or $500,000, Chapter 7 wipes it out. The discharge also covers medical debt in collections, medical debt subject to lawsuits, and medical debt with judgments.
Eligibility
To file Chapter 7, you must pass the means test. If your income is below your state's median, you automatically qualify. If above, you may still qualify after deducting allowed expenses. Medical expenses are an allowable deduction on the means test, which helps people with high healthcare costs qualify even with above-median income. SSDI and SSI are excluded from the calculation.
The Timeline
Filing to discharge takes approximately 90 days. Day 1: File the petition. The automatic stay immediately stops all collection. Day 30-40: 341 meeting with the trustee (brief, often 5 minutes). Day 60: Deadline for objections. Day 90: Discharge entered, case closed. Medical providers cannot contact you again about discharged debts.
What You Keep
Most Chapter 7 filers keep everything they own. State exemptions protect your home (homestead exemption), vehicle (up to a dollar amount), retirement accounts (fully exempt), household goods, clothing, and tools of your trade. Medical equipment and disability-related property are typically fully exempt.
Frequently Asked Questions
Will I lose my house or car?
Most filers keep both. Exemptions protect your home equity and vehicle value. If you are current on payments and within exemption limits, you keep your property.
Can I still see my doctor after filing?
Yes. A medical provider cannot refuse to see you solely because you discharged their debt in bankruptcy. Emergency care is always available under EMTALA regardless.
How much does Chapter 7 cost?
Filing fee is $338 (waivable for low income). Attorney fees range from $1,000-$2,500. Filing without a lawyer reduces cost to just the filing fee.
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