Are Medical Bills Included When You File for Bankruptcy?

When the Affordable Care Act passed in 2010, there was a presumption that this law’s provisions would resolve most, if not all, of the U.S. health industry’s current problems. While seemingly utopic, there was a unifying hope that the ACA would minimize Americans’ risk of falling into financial trouble due to debilitating medical bills. That hope stemmed from the reassuring provision of the Affordable Care Act that all Americans would have access to healthcare insurance based on the law’s requirements.

Unfortunately, there’s evidence that things haven’t panned out as lawmakers initially planned. The number of bankruptcy cases in the United States continues to rise, and many of these cases cite excessive medical bills as the cause. 

Those unfamiliar with bankruptcy basics may wonder if medical bills are included when you file for bankruptcy. For answers to your questions, read on. You can also reach out to a local attorney like wh Law, a bankruptcy lawyer in North Little Rock, with specific questions about your unique situation.

The evidence

To settle the doubts of those filing for bankruptcy, researchers conducted a study several years ago. The research team featured doctors, bankruptcy attorneys, and sociologists hoping to gain insight into debtors’ financial situations. After interviewing 910 people who had filed for bankruptcy since the Affordable Care Act’s implementation, the team reached fascinating conclusions. They found that 68% of the people interviewed cited medical bills as one reason they filed for bankruptcy. As a point of reference, the number before the ACA was almost 66%.

If you’re dealing with financial strife and contemplating bankruptcy, you may be wondering what will happen to your medical bills. Hopefully, your financial problems aren’t the consequence of ignoring ACA law. If you did disregard ACA law and incurred debt, you should research how the courts will treat your medical debt when you file for chapter 7 or chapter 13 bankruptcy to avoid any surprises.  

The differences between Chapter 7 or 13 bankruptcy

As you prepare to go down the path of bankruptcy, it’s essential to choose a reputable attorney. With the right legal counsel, you can better understand the differences between Chapter 7 and 13 bankruptcy. Once your attorney has explained their distinctions, you’ll need to use this information to make an informed decision about your financial future.

Here’s what the attorney will likely tell you.

In Chapter 7 bankruptcy, the client is seeking the discharge of all personal unsecured debt. If granted by the court, the client would have to sell certain assets to resolve as much debt as possible. To be clear, the courts won’t require a debtor to sell their primary home, vehicle, or other protected assets. However, if you own a second home, a motorboat, fine jewelry, or other high-ticket items, the courts may force you to give up these assets. 

From there, the proceeds from sold assets would be allocated to creditors. Then, the courts would absolve the debtor of any remaining debts. 

Chapter 13 Bankruptcy isn’t quite as intense. With this option, the client would only be seeking protection from creditors currently harassing them and filing lawsuits against them. During this cooling-off period, the client would work with a court-appointed trustee. The trustee’s job is to help the client reorganize their debt and develop a manageable debt repayment plan. Again, the filing would only include unsecured personal debt.

Unfortunately, filing bankruptcy can affect your credit rating tremendously. Chapter 7 could damage your score for up to 10 years. With these high stakes in mind, you’ll need to closely assess your options.

Your medical bills and Chapter 7 bankruptcy

The bankruptcy laws deem medical bills as general unsecured debts, putting them in the same category as credit card and personal (payday loans, etc.) debt. Therefore, you would likely be able to eradicate the medical bill debt you accumulated before your bankruptcy filing.

That said, there is a caveat. The caveat is that a debtor meet specific requirements to receive Chapter 7 benefits. The main prerequisite is that an individual must demonstrate that his or her disposable income falls below the standards of the Chapter 7 means test. Should you hit that mark, you’ll officially qualify to file for Chapter 7 bankruptcy. 

Your medical bills and Chapter 13 bankruptcy

With this bankruptcy option, you would indicate your desire to pay off your medical bills if and when possible. The court will ask a trustee to review your disposable income, and compare it to your total debt. The trustee will then determine how much you can pay each month on your unsecured debt. Based on that number, your creditors would be entitled to their pro-rata portion of the money until you pay off the remaining debt.


Prior to filling, you’ll need to acknowledge that you might not qualify for any kind of bankruptcy protection. In that case, you would need to develop a plan to pay your medical bills in-full. Otherwise, you should prepare to face lawsuits. For more information on how to protect yourself from costly legal proceedings, contact a reputable bankruptcy attorney of your choosing. These legal professionals will have your best interests in mind, and strategize accordingly. 

Healthcare Business Today is a leading online publication that covers the business of healthcare. Our stories are written from those who are entrenched in this field and helping to shape the future of this industry. Healthcare Business Today offers readers access to fresh developments in health, medicine, science, and technology as well as the latest in patient news, with an emphasis on how these developments affect our lives.

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