How Medical Bills Are Treated in Chapter 13 Bankruptcy

Filing for Chapter 13 bankruptcy doesn't mean paying back every dollar of medical debt you owe. You pay back only a portion of it through your court-approved repayment plan, and the balance is wiped out once you complete it. Medical bills are one of the top reasons people turn to Chapter 13 in the first place, and what you'll actually owe hinges on your income, your other debts, and what your unsecured creditors would have collected had you gone the Chapter 7 route instead.

Filing also puts an immediate stop to collection activity. The moment your case hits the court, the automatic stay shuts down calls, letters, and lawsuits from hospitals, doctors, and debt collectors for as long as your bankruptcy is open. (11 U.S.C. § 362.)

How Chapter 13 Bankruptcy Treats Medical Debt

Chapter 13 lumps medical bills in with your other qualifying unsecured debt. Because you pay this group only the money remaining after paying other more important debts, and they must share it, you only pay a percentage of it over your three- or five-year plan. The court erases the rest once you're done.

Because medical bills and credit card balances are both considered unsecured debt, most filers pay only a fraction of them through their plan. Keep up with your payments, and the remainder disappears once your plan period ends.

Tip. Although most unsecured debt qualifies for a discharge, not all does. The most common types of unsecured debts that are nondischargeable include student loans, domestic support obligations, and many tax debts. You must repay all domestic support obligations and certain tax debts fully through the plan. You aren't required to fully repay student loans in Chapter 13, but you'll owe the balance after your bankruptcy ends.

What You'll Pay on Medical Debt in Chapter 13

What you owe on each debt depends on the type: You've got to keep making payments on secured debts, such as your mortgage or car loan, if you want to hang onto that property. Any arrears on secured debts are paid in full through the plan, and certain debts, such as child support, must be paid in full regardless.

How Your Property Can Increase a Chapter 13 Payment

One of the most appreciated benefits of Chapter 13 is that you keep your property throughout the case. But it can come at a cost. If you have a lot of property that isn't protected by bankruptcy exemptions (nonexempt property), it increases how much you must pay unsecured debt.

That group of creditors must get at least as much as they would've gotten had you filed Chapter 7 instead. If your plan doesn't meet that threshold, the court won't confirm it until you revise it, say, by extending your plan term or increasing your payments.

If you can propose a plan that meets all requirements and the court approves, and you've made all payments, whatever's left on your unsecured debt is discharged. For a deeper look at how those percentages get calculated, you'll want to learn more about the Chapter 13 repayment plan.

Who Can File Chapter 13 for Medical Debt?

You must be an individual to file for Chapter 13. Corporations and partnerships don't qualify. Also, your unsecured debt, including medical bills, must fall within the current Chapter 13 debt limits. If you owe more medical debt than the limit allows, you can file for Chapter 11 instead. (11 U.S.C. § 109(e).)

The debt limitations are $1,580,125 for secured debt and $526,700 for unsecured debt. The current amounts apply to cases filed between April 1, 2025, and March 31, 2028, and are published in the Federal Register and are available on the U.S. Courts Chapter 13 Bankruptcy Basics webpage.

Chapter 7 Bankruptcy and Medical Debt

Chapter 7 can wipe out medical and credit card debt too, and it does so faster than Chapter 13. A successful case typically discharges 100% of your qualifying medical debt within a few months without requiring you to repay creditors. But not everyone qualifies for Chapter 7. You'll first need to pass the means test, which measures your income against your state's median and, if needed, digs into your expenses to see whether you could afford to pay something back through a Chapter 13 plan instead. (11 U.S.C. § 707(b).)

Here's how the two chapters stack up when medical debt is the issue.

Why Medical Debt Counts as Unsecured Debt

Medical debt is unsecured because you haven't put up property, such as a house or car, as collateral for it. Plenty of people owe money straight to doctors, labs, hospitals, outpatient surgery centers, and dentists. Others charge their medical bills to a credit card and rack up debt that way instead. Either way, that debt lands in the unsecured category.

The Bottom Line on Medical Debt and Bankruptcy

Whichever chapter fits your situation, bankruptcy remains one of the most effective ways to dig out from under medical debt. Back in 2007, the American Journal of Medicine found that 62% of people filing for bankruptcy pointed to medical debt or lost income from illness as a leading reason for filing, and that trend hasn't let up since.

If you're not sure whether Chapter 7 or 13 would be most beneficial, a bankruptcy lawyer can look at your income, debts, and property and tell you whether Chapter 13 or Chapter 7 makes more sense for your medical debt.