David M. Siegel answers in 28 seconds. Watch on YouTube · Read the transcript.
Short answer: Yes — medical bills are probably the easiest debt of all to discharge. They are eliminated outright in Chapter 7, and in Chapter 13 they are repaid in whole or in part depending on the case. Either way they are straightforward to handle.
The debt nobody chose
Almost every other debt involves a decision at some point. Medical debt usually does not. Someone got sick, or was in an accident, and the bills arrived afterward with no relationship to what the household could absorb.
That is worth saying plainly because medical debt carries a peculiar shame — people feel they should somehow have managed it. There was nothing to manage. An emergency admission does not come with a price list.
Why it discharges so easily
Medical bills are unsecured. The hospital has no lien on your home, no interest in your car, nothing to repossess. That puts them in the same category as credit cards and personal loans, and it makes them among the most straightforward debts in any bankruptcy case.
It does not matter whether the bill is still with the provider or has been sold to a collection agency. The debt is listed, the agency is notified, and the discharge covers it.
A Chapter 13 wrinkle worth knowing
In a Chapter 13 the plan repays a percentage of unsecured debt, so medical bills are repaid in whole or in part alongside everything else. That usually comes up when a filing is driven by something other than the medical debt — a foreclosure, say — and the bills come along with the case.
In a Chapter 7, they simply go away.
If treatment is ongoing
Timing deserves thought when care is continuing. A discharge covers debts that exist on the filing date, so bills incurred afterward are yours. If a surgery or a course of treatment is scheduled, it is often better to complete it and then file.
It is also worth knowing that discharging a balance does not by itself end the relationship with a provider, though some practices do decline to continue treating on credit. That is a conversation worth having before filing rather than after.
Buried in medical bills you did not choose?
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Full transcript of the video
what about medical bills medical bills are probably the easiest debt to discharge they’re very common in a Chapter 7 we also see them in a Chapter 13 they either get eliminated in a Chapter 7 or they get repaid either all or a portion in a Chapter 13 depending on the particular case but medical bills are definitely something that gets included in a Chapter 7 or Chapter 13 bankruptcy and they are easily handled by your attorney and throughout the case
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About the author. David M. Siegel has represented consumer bankruptcy clients in the Northern District of Illinois since 1991 and is the author of several books on consumer bankruptcy. The firm has offices at 790 Chaddick Drive, Wheeling, IL 60090 and 10540 S. Western Ave, Suite 202, Chicago, IL 60643, and handles cases by phone for clients throughout the Chicago area.
This article is general information about Illinois and federal bankruptcy law. It is not legal advice, and reading it does not create an attorney-client relationship. Every case turns on its own facts — speak with an attorney about yours.