Medical Debt and Bankruptcy in New York

Medical debt is classified as general unsecured debt under bankruptcy law. This means it is 100% dischargeable in both Chapter 7 and Chapter 13:

• Hospital bills (ER visits, surgeries, inpatient stays)
• Doctor and specialist bills
• Dental and vision debt
• Ambulance and transport bills
• Lab work and imaging charges
• Medical debt in collections
• Medical debt judgments
• Credit card debt used to pay medical bills

There is no minimum or maximum amount. Whether you owe $2,000 or $200,000, bankruptcy can eliminate it.

Chapter 7 - Fastest Relief

If medical debt is your primary problem and you pass the means test (income below $66,973 for a single filer in New York), Chapter 7 eliminates medical bills in 3-4 months. You keep exempt property and walk away debt-free.

Best for: People whose primary debt is medical, with income below the median, and no assets at risk.

Chapter 13 - Comprehensive Solution

If medical debt is part of a larger problem (behind on mortgage, car loan, taxes), Chapter 13 lets you address everything in one plan. Medical debt is typically paid pennies on the dollar or nothing through the plan.

Best for: People who need to catch up on a mortgage or car payment while also eliminating medical debt.

New York law requires nonprofit hospitals to offer financial assistance programs. Before filing bankruptcy, consider requesting a reduction or write-off from your hospital:

• NYC Health+Hospitals - The nation's largest public hospital system. Offers sliding-scale fees and financial assistance for uninsured and underinsured patients.
• NYU Langone Health - Financial assistance program for qualifying patients. Generally covers those at or below 300% of the federal poverty level.
• Mount Sinai Health System - Charity care and financial assistance available. Applications accepted at all Mount Sinai locations.
• NewYork-Presbyterian - Financial assistance for emergency and medically necessary care.

Under New York's Surprise Bill Law, you are also protected from unexpected out-of-network charges for emergency services.

Recent changes to credit reporting have reduced the impact of medical debt:

• Paid medical collections are removed from credit reports
• Unpaid medical debt under $500 is no longer reported
• Medical debt has a 1-year waiting period before it can appear on credit reports

However, large unpaid medical debts and medical debt judgments still impact your credit significantly. Bankruptcy provides a clean break and a path to rebuild your credit.

If a medical provider or collection agency has obtained a court judgment and placed a lien on your property, the situation is more complex. The lien may need to be addressed separately in bankruptcy:

• Chapter 7: You can file a motion to avoid a judicial lien on exempt property under 11 U.S.C. section 522(f).
• Chapter 13: Judgment liens can be addressed through the plan.

New York's generous exemptions help protect your property from medical debt liens.