Can I File a “Medical Bankruptcy”?

by Brett Weiss, Esq.

August 24, 2007

You or a family member has been ill. Even if you have health insurance, co-pays and insurance company games may leave you with thousands, or tens of thousands of dollars in medical debt. And if you don’t have health insurance, a serious illness can be a financial nuclear bomb.

Can you file a “medical bankruptcy” just to deal with the medical debt?

The short answer is that you can’t just deal with the medical debt. The Bankruptcy Code doesn’t treat medical debt differently from credit card, car loan or mortgage debt. All debt is treated the same. There is no provision for a “medical bankruptcy.” But wait–this doesn’t mean that bankruptcy can’t still be a solution to a medical debt crisis.

Many people wrongly think that if they file for bankruptcy they will lose their home, their cars, and their household goods. This is untrue in the vast majority of cases. Every state allows people who file to “exempt,” or keep, certain items. In some states, any equity in your home us absolutely protected, as are cars, wedding rings, and a certain amount of cash. These exemptions vary tremendously from state to state, so be sure to check with a local bankruptcy attorney to find out if any of your assets are at risk. And if there is no equity in your home or car, in almost all cases, they won’t be affected by a bankruptcy filing.

So although there is no “medical bankruptcy,” bankruptcy to deal with large medical bills you simply can’t pay is certainly one option that may let you get out from under the weight of these necessary but unexpected bills.

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Brett Weiss, a senior partner at Chung & Press, LLC, represents people and businesses in all phases of bankruptcy. He has experience in complex individual Chapter 7, Chapter 11 and Chapter 13 bankruptcy cases, and in Chapter 11 small business restructuring and reorganization. Mr. Weiss lectures nationally on bankruptcy issues. He has testified before the Federal Bankruptcy Rules Committee, the Consumer Financial Protection Bureau, and has twice testified before Congress on bankruptcy and credit issues. Brett Weiss is the co-author of Chapter 11 for Individual Debtors, and has written Not Dead Yet: Bankruptcy After BAPCPA, for the Maryland Bar Journal, as well as hundreds of blogs for the Bankruptcy Law Network. With his law partner, he recorded a 13-hour basic bankruptcy training series, and leads intensive three-day Chapter 11 training boot camps. Mr. Weiss has received international media attention in connection with his work. He was interviewed by Barbara Walters on The View, has appeared on the Today Show, Good Morning America, ABC News with Peter Jennings, the Montel Williams Show, National Public Radio, AARP-TV, the BBC World Service, German state television, and numerous local radio and television programs, and been quoted in Money magazine, The Washington Post and The Baltimore Sun, among others. Brett Weiss is the Maryland State Chair for the National Association of Consumer Bankruptcy Attorneys, a founding member of the Bankruptcy Law Network, on the board of the Maryland State Bar Consumer Bankruptcy Council, and a member of the American Bankruptcy Institute, the Bankruptcy Bar Association of Maryland, and the Civil Justice Network. He has been recognized as a “Super Lawyer” every year since 2007 for Maryland and the District of Columbia, and in 2011 received the Distinguished Service Award from the National Association of Consumer Bankruptcy Attorneys for his work on behalf of consumers across the country. Mr. Weiss is admitted to practice before Maryland and District of Columbia federal and state courts, the United States Courts of Appeals for the DC, Fourth and Eighth Circuits, The United States Tax Court, and the Supreme Court of the United States, and has been practicing law since 1983.

Last modified: January 23, 2010