When you file a Chapter 7 or Chapter 13 case the protection of the automatic stay immediately stops all medical debt collections and lawsuits against you. The automatic stay also prohibits your creditors from contacting you by phone, letter, or other means to demand payment. Once you have successfully completed your bankruptcy case all of your medical bills, dental bills, and hospital or doctor charges will be discharged (wiped out).
What is the Automatic Stay?
The automatic stay is a rule that automatically goes into effect the moment that you file a bankruptcy case and protects you and your property from creditors. This means that your creditors must immediately stop all collection efforts against you such as garnishing your wages or bank accounts. There are limited circumstances where a creditor may request that the court lift the automatic stay, or sometimes the automatic stay may not go into effect at all. To learn more about the automatic stay, visit Nolo’s Automatic Stay topic page.
Medical Debt in a Chapter 7 Bankruptcy
A Chapter 7 case will completely wipe out all of your medical debts and lawsuits without you having to make any payments to your creditors. Once you file a Chapter 7 case the automatic stay immediately kicks in and stops any pending lawsuits or collection efforts against you. A typical Chapter 7 case lasts around three months and the automatic stay will remain in effect during that time. The automatic stay terminates at the end of your case. At that time the court will issue a discharge order notifying all of your creditors that you are no longer legally responsible to pay back your debts.
Medical Debt in a Chapter 13 Bankruptcy
Medical debt and lawsuits can be discharged in a Chapter 13 case but you most likely will end up repaying a portion of your debts to your creditors. In Chapter 13 cases you develop a reasonable payment plan with your creditors that will last over a period of three to five years. Ideally you will only pay back a small portion of your debt during your case and any balance that remains at the end of your case will be discharged. Just like in a Chapter 7 case, the protection of automatic stay remains in place during your entire case.