Can I Get Rid of my Medical Bills in Bankruptcy?
If you're considering bankruptcy because of overwhelming medical bills, you may be wondering if all your medical debt will be forgiven. The answer is that it depends on the type of bankruptcy you file.
If you file Chapter 7 bankruptcy, also called liquidation bankruptcy, most of your debts will be discharged, including medical bills. In a Chapter 7 bankruptcy, your nonexempt assets are sold and the proceeds are used to pay your creditors. After your creditors are paid, any remaining debt is discharged.
However, if you file Chapter 13 bankruptcy, also called reorganization bankruptcy, you'll have to repay some or all of your medical bills over a three- to five-year period. In a Chapter 13 bankruptcy, your assets are not sold but you do have to make monthly payments to your creditors according to a repayment plan approved by the court.
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