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What type of bankruptcy can help to alleviate medical debt?

On Behalf of | Feb 5, 2024 | Consumer bankruptcy |

Advances in medical capabilities mean that more people survive medical emergencies, traumas like car crashes and diseases than ever before. Sadly, many of those patients end up struggling to overcome the debt they accrue when receiving cutting-edge care.

Medical debt has become a major financial issue for many people in the United States. In fact, stories about medical bankruptcy have appeared on many different national news networks in recent months. Some of these stories specifically refer to medical bankruptcy, which might confuse people who are struggling with medical debt.

Is there a specific type of bankruptcy someone must file if they hope to regain control over medical debts specifically?

There is no special type of medical bankruptcy

Contrary to the way that some news stories talk about bankruptcy targeting medical debts, there is no special type of bankruptcy specifically for those with large medical debts. Both of the most common types of bankruptcy filed by individuals can lead to a discharge of unsecured debt, including medical debt.

In a Chapter 7 bankruptcy, someone with large amounts of medical debts could halt collection activity and obtain a discharge relatively quickly if they qualify. In a Chapter 13 bankruptcy, someone might make structured payments on their debts, including their medical debts, for several years before they qualify for a discharge.

The best option for an individual depends on an analysis of their financial circumstances. Both income levels and personal property can influence which type of bankruptcy is the best choice for someone considering bankruptcy. And, at the end of the day, using bankruptcy to regain control over unsustainable medical debt may benefit those with large outstanding medical bills.