We’ve all been there: the doctor’s visit that leaves your wallet feeling lighter than your spirits. One minute, you’re trying to understand medical jargon, and the next, you’re staring at a bill that looks more like a house payment.
Medical debt can feel overwhelming, but you have options. In this article, we’ll discuss what happens when you don’t pay medical bills, how medical debt bankruptcy works, and alternatives to filing for bankruptcy.
What Happens When You Don’t Pay Medical Bills?
Medical debt can lead to more than just a few awkward voicemails from collections. First, let’s clarify what counts as medical debt. It includes a wide range of health-related expenses, such as:
- Hospital bills
- Emergency care
- Long-term treatments like physical therapy or dialysis
- Prescription costs
If you fall behind on paying these bills, it’s not just the provider who notices. The consequences can be serious:
- Debt collection: Unpaid medical debt often gets sent to collections, meaning third-party agencies will take over—usually with less empathy and more phone calls.
- Credit score impact: Once your bill is sent to collections, your credit score can take a hit. While new rules give you a short grace period before medical debt affects your credit report, ignoring it could hurt your score.
- Lawsuits: In some cases, debt collectors can sue you over unpaid balances.
- Wage garnishment: Depending on your state, a court order could allow them to take a portion of your paycheck.
- Asset seizure: This is typically limited to extreme cases, but if a court judgment goes unpaid, it could take your property.
Medical debt bankruptcy gives you a way out of debt, letting you start over. It’s no wonder that medical debt is one of the leading causes of bankruptcy filings in the U.S.
What Is Medical Debt Bankruptcy?
Medical debt bankruptcy isn’t an official type of bankruptcy. It’s a term people use when overwhelming medical debt is the main reason they file.
Most of the time, medical debt is classified as unsecured, non-priority debt—which is good news. That means it’s typically treated the same way as credit card debt or personal loans and can disappear completely after bankruptcy.
Filing for bankruptcy also triggers something called an automatic stay, which is legal speak for “everyone, back off.” It stops collections, lawsuits, and wage garnishment while your case is sorted. It’s not a free pass, but it is a breather.
However, some medical debt isn’t dischargeable in bankruptcy, including:
- Secured medical debt: If you financed expensive medical equipment (say, a hospital bed or oxygen machine), that debt may still linger after you file for bankruptcy.
- Medical liens: If a medical provider placed a lien on your personal injury settlement, you may still have to deal with that even after bankruptcy.
How Medical Debt Bankruptcy Works
While it’s not a decision to be taken lightly, for many people, filing for medical debt bankruptcy is the most viable path to financial recovery. Here’s how medical debt bankruptcy works.
1. Chapter 7 vs. Chapter 13
Two primary types of consumer bankruptcy deal with medical debt:
- Chapter 7: This is the faster route, typically lasting three to six months. If you qualify, most or all of your medical debt may be discharged. You may have to sell non-essential assets, but many people keep most of their property.
- Chapter 13: If you earn enough money to repay some of your debt, this option establishes a three- to five-year repayment plan. After the plan ends, remaining medical debt can be discharged.
2. Automatic Stay
Once you file, the automatic stay kicks in immediately. This legal step stops all collection efforts, phone calls, wage garnishments, and lawsuits. It’s like putting debt collections on pause while the court works things out.
3. Life After Bankruptcy
Once your bankruptcy is finalized, your old medical debt is gone, but new expenses are a different story. Any new medical bills that come in after the filing date aren’t covered.
Alternatives to Medical Debt Bankruptcy
Medical debt bankruptcy can relieve a lot of pressure, but it isn’t the only way to get out of debt. Consider these medical debt relief alternatives before considering bankruptcy:
- Negotiate with the hospital: Hospitals may be more flexible than you think. Contact the billing office, explain your situation, and request a discount or a payment plan. Ask about “charity care” or financial assistance. Non-profit hospitals are sometimes required to have these programs, but they don’t always advertise them.
- Consider credit counseling or debt settlement: With debt settlement, you negotiate to pay less than you owe. You can also work with a credit counseling service to help you make a plan, talk to your creditors, and set up a debt management plan (DMP).
- Look into debt forgiveness: Some hospitals and nonprofits are stepping in to erase medical debt. Programs like Undue Medical Debt buy old bills and cancel them for qualifying patients. Some states and counties are also getting involved, wiping out medical debt for thousands of residents. This option isn’t a guarantee, but a quick Google search could yield some life-changing results.
Get A Financial Fresh Start
Navigating medical debt can feel like climbing a mountain in flip-flops. It’s tough, but you’re strong and smart. Whether you choose to negotiate with the hospital, explore payment plans, or consider bankruptcy, remember that you’re not alone in this. Millions of people face medical debt, and many have found their way out. Filing for medical debt bankruptcy is a big step, but it can provide a much-needed fresh start.
The content provided is intended for informational purposes only. Estimates or statements contained within may be based on prior results or from third parties. The views expressed in these materials are those of the author and may not reflect the view of SmartSpending. We make no guarantees that the information contained on this site will be accurate or applicable and results may vary depending on individual situations. Contact a financial and/or tax professional regarding your specific financial and tax situation. Please visit our terms of service for full terms governing the use this site.