If you’ve been putting off a hospital bill because you assumed bankruptcy couldn’t touch it, you’re not alone.
In fact, it’s one of the most common surprises we see in our office. Here’s how it usually happens. A client comes in, we go over their credit cards, their personal loans, maybe an old car repossession. We prepare the petition. Then, at the signing appointment, right before everything gets filed, they slide a stack of envelopes across the table and say something like, “I didn’t think these counted, but what about my medical bills?”
The answer is almost always the same: yes, those count. And yes, we can get rid of them. We’re glad when clients bring them up, even late. But waiting until the last minute can mean going back to revise the paperwork, delaying the filing, or, worst case, accidentally leaving a debt out of the case.
So let’s clear this up once and for all. The short version: medical bills are some of the easiest debts to eliminate in bankruptcy. It doesn’t matter if it’s a $40 copay from an urgent care visit or a $140,000 bill from a hospital stay. Bankruptcy treats them the same way it treats a credit card balance. In this article, we’ll walk through why so many people believe otherwise, how medical debt is handled in Chapter 7 and Chapter 13, and what you should bring to your consultation so nothing gets missed.
Why So Many People Think Medical Bills Are Different
We hear a lot of reasons why clients assume their medical debt is off limits. None of them are true, but they’re understandable. Here are the most common ones:
- “It’s not like a credit card.” You didn’t choose to break your leg or get sick. Because medical debt feels involuntary, people assume it lives in a different category. It doesn’t. To the bankruptcy court, a hospital is just another creditor.
- “It’s owed to a hospital, not a bank.” Some people think debts owed to hospitals, clinics, or doctors are protected somehow. They aren’t.
- “It’s already in collections.” Once a bill gets sold or handed to a collection agency, people tend to forget about it or assume it’s someone else’s problem now. A collection account is still a debt, and it can still be discharged.
- “It’s too small to matter.” A $75 lab bill doesn’t seem worth mentioning next to $30,000 in credit cards. But every debt matters, and we’ll explain why below.
- “It’s too big for bankruptcy.” On the other end, some people think a six-figure hospital bill is just too large. There is no cap on how much medical debt bankruptcy can eliminate.
- “I set up a payment plan.” Agreeing to pay $50 a month to a hospital doesn’t change the nature of the debt. It’s still unsecured, and it can still be wiped out.
- “It isn’t on my credit report.” This one is getting more common in Colorado. A 2023 Colorado law generally keeps medical debt off consumer credit reports. That’s good news for your credit score, but it also means many people never see those bills when they pull their report to get ready for bankruptcy. Out of sight, out of mind.
That last point is a big one. When we run a credit report to help prepare your case, medical debt may simply not be there. That’s why we depend on you to tell us about it.
How Chapter 7 Handles Medical Bills
Bankruptcy law sorts debts into a few categories. The two that matter most here are secured debts and unsecured debts. A secured debt is tied to property. Your car loan is secured by your car. Your mortgage is secured by your house. If you stop paying, the lender can take the property back. An unsecured debt isn’t tied to anything. Nobody can come and repossess your appendix. Medical bills, credit cards, personal loans, and old utility bills all fall into this group.
Within unsecured debts, there’s one more split: a small list of “priority” debts that get special treatment (like most recent taxes and child support), and everything else. Medical bills fall into the “everything else” group, which is exactly where you want them. In a Chapter 7 case, those general unsecured debts are discharged. That’s the legal word for wiped out. Once you receive your discharge, usually about four months after filing, the hospital, the doctor, the ambulance company, and any collection agency are permanently barred from trying to collect. That means:
- No more collection calls or letters
- No lawsuits
- No wage garnishment
- No bank account levies
- No obligation to pay a dime of it back
And you don’t have to wait for the discharge to get relief. The moment your case is filed, the automatic stay goes into effect. That’s a court order that stops collection activity right away, including lawsuits and garnishments already in progress.
How Chapter 13 Handles Medical Bills
Not everyone files Chapter 7. Some people choose Chapter 13 because they’re behind on a mortgage or car payment, have income above the Colorado median, or have property they want to protect. Medical bills work well in Chapter 13, too. In a Chapter 13 case, you make one monthly payment to a trustee for three to five years. For most filers, that payment is based on what you can realistically afford, not on how much you owe.
Your medical creditors are grouped in with your other general unsecured creditors, like credit cards. They share whatever is left over after the more important debts are taken care of. In many Chapter 13 plans, unsecured creditors receive only a small percentage of what they’re owed. Sometimes it’s very little. And here’s the key part: when you finish your plan, whatever balance is left on those medical bills is discharged. So whether your hospital bill is $2,000 or $200,000, it doesn’t usually change your Chapter 13 payment much. Adding more medical debt often just means each unsecured creditor gets a smaller slice of the same pie.
There’s another benefit worth mentioning. If you have new medical expenses during your plan, that can sometimes be a reason to adjust your payment. Life doesn’t stop for three to five years, and the court understands that.
Small Bills Matter Too
This is where we see the most confusion. Clients will tell us about a big hospital bill but leave out the little ones because they seem too minor to bother with. Here’s why we want every single one. When you file bankruptcy, you sign your petition under penalty of perjury. You’re telling the court that you’ve listed all of your debts. Not most of them. All of them. The trustee and the court expect a complete picture. Leaving out a debt can cause real problems:
- It can create confusion about whether that debt was discharged. In most Chapter 7 cases, an unlisted general unsecured debt is still discharged. But the creditor never got notice, so they may keep sending bills. Sorting that out after the fact takes time and sometimes money.
- It can mean amending your paperwork. If you remember a debt later, we may need to file an amendment, which can come with a court fee.
- It can raise questions. A trustee who finds a debt you didn’t list may wonder what else was missed.
The kinds of small medical bills people tend to forget include:
- Copays and coinsurance balances
- Urgent care and emergency room visits
- Ambulance rides (these are often surprisingly expensive)
- Lab work and imaging, which are frequently billed separately from the doctor
- Anesthesiologists and radiologists you never actually met
- Dental and orthodontic balances
- Eye care, physical therapy, and chiropractic visits
- Mental health and counseling balances
- Old bills from a provider that has since changed its name or been bought out
If it came in an envelope with a medical logo on it, we want to see it. Even if it’s $12.
Large Bills Aren’t Too Big
On the other end of the spectrum, we meet people who are facing truly life-changing medical debt. A cancer diagnosis. A premature baby in the NICU. A car accident that led to weeks in the hospital and months of rehab. Bills like these can easily run into six figures, even for people with good insurance. We want to be very clear: there is no dollar limit on how much medical debt you can discharge. A $300,000 hospital bill is treated exactly like a $300 one. The size of the debt doesn’t make it harder to eliminate. Large medical debts are also the ones most likely to turn into lawsuits. Hospitals and their collection agencies do sue patients in Colorado.
Once a creditor gets a judgment against you, it can ask the court for a wage garnishment, taking a portion of every paycheck, or a bank levy that freezes the money in your account. If you’re already being sued, or you’ve already been served with garnishment papers, don’t wait. Filing bankruptcy stops the lawsuit and the garnishment as soon as your case is filed. In some situations, money garnished in the 90 days before filing can even be recovered. A few other things to know about larger bills:
- Payment plans don’t protect you. Some people keep sending a hospital $100 a month on a $60,000 balance and think that keeps them safe. It may keep collectors away for a while, but it isn’t making a real dent, and it doesn’t change your options in bankruptcy.
- Ask about financial assistance, too. Colorado’s Hospital Discounted Care law requires many hospitals to screen patients for reduced pricing based on income. That can be worth checking, but it’s often not enough on its own when the bills are this large.
- Medical debt rarely travels alone. In our experience, a big medical event usually brings other debt with it: credit cards used to cover rent during time off work, a personal loan, maybe a missed car payment. Bankruptcy lets us deal with all of it at once.
Common Worries We Hear About Medical Bills
“I don’t want to lose my doctor.” This is a fair concern. Some providers may decide not to keep treating a patient whose bill was discharged. Many don’t, especially larger hospital systems. And you are always allowed to voluntarily pay a provider after your case is over if you want to keep that relationship. You just can’t be forced to.
“Can I pay off my favorite doctor before I file?” Please talk to us first. Paying one creditor more than a few hundred dollars in the 90 days before filing can be treated as a “preference.” The trustee may be able to take that money back from the doctor, which is the opposite of what you wanted. There are usually better ways to handle it.
“What about future care?” Bankruptcy only covers debts you owe as of the day you file. Treatment you receive after filing is a new bill. If you have ongoing care or an upcoming procedure, let us know. Timing your filing can make a real difference.
“I paid my medical bills with a credit card.” Then it’s credit card debt now, and that’s generally dischargeable too. Just be upfront with us about recent large charges, so we can review the timing.
“These are my spouse’s bills, not mine.” Colorado’s family expense law can make both spouses responsible for certain family expenses, and medical care is a common one. If your spouse’s or your child’s medical bills are coming to you, bring them in. We’ll look at whether you’re legally on the hook and whether one or both of you should file.
“Will this show up on my credit anyway?” Your bankruptcy will appear on your credit report. But for most of our clients, their score is already hurting from missed payments, and it often starts recovering soon after the discharge. Getting rid of the debt is what lets you rebuild.
What to Bring to Your Consultation
The best time to tell us about your medical bills is at the very beginning, not at the signing appointment. Here’s how to gather them:
- Pull out every medical envelope you have. Opened or unopened, recent or old. Don’t sort them first. Just put them in a bag and bring the whole thing.
- Check your patient portals. Most hospital systems and clinics have online accounts that show your current balance. Take screenshots or print the statements.
- Look through your email and texts. Many providers and collection agencies now send bills electronically.
- Write down anything you remember. If you know you went to the ER two years ago but can’t find the bill, tell us the hospital and the approximate date. We can work with that.
- Bring collection letters and court papers. If a collection agency or law firm has contacted you, or you’ve been served with a lawsuit, we need to see it.
- Don’t forget family members. Include bills for your spouse or children that are being sent to you.
Don’t worry if it’s messy or incomplete. Our job is to help you organize it. What matters is that nothing gets left out.
Medical Debt Shouldn’t Follow You Forever
Nobody plans to get sick or hurt. Medical debt is one of the leading reasons people end up overwhelmed, and it’s one of the most unfair kinds of debt there is. You didn’t overspend. You needed care. The good news is that bankruptcy was built for exactly this kind of situation. Whether you owe a few small copays or a hospital bill bigger than your mortgage, those debts can be eliminated. This isn’t a loophole. It’s what the law is designed to do. So if you’ve been holding on to a pile of medical bills because you thought there was nothing we could do, bring them in. Bring all of them. Let’s take a look together and figure out the best way forward.
Schedule a Free Consultation with a Denver, Colorado Bankruptcy Attorney
If you’re wondering whether you eliminate medical debt by filing bankruptcy in Colorado, the best thing you can do is sit down with an experienced bankruptcy attorney for a free consultation. We’ll go over your income, your household size, your expenses, and your assets to give you a clear, honest answer about whether Chapter 7 is right for you, and if not, what your other options look like. We offer free consultations to individuals who want to learn more about the Colorado bankruptcy process. During your consultation, you’ll meet with an experienced bankruptcy attorney. The easiest way to make an appointment for a free consultation is by going to our scheduling page. Check out our client reviews on Google, Facebook, and Avvo! Common Bankruptcy Questions
