Sky-high medical bills are becoming an epidemic, with costly procedures and treatments draining Americans’ bank accounts then demanding even more. This happens more often than you might think.

According to a 2019 report, one study found that every single year, more than half a million Americans file bankruptcy because they can’t afford to pay their medical bills. And nearly two-thirds of all bankruptcies from 2013-16 were at least in part because of medical debts.

But what actually happens to your medical bills if you file for Chapter 13 bankruptcy? Here’s a brief explanation.

Chapter 13 bankruptcy basics

First, let’s lay out the basics of Chapter 13 bankruptcy. People often refer to it as a reorganization plan. Unlike Chapter 7, in which the filer liquidates most of their assets, Chapter 13 sees people create a repayment plan.

This repayment plan lasts three to five years and is based on the filer’s financial situation. During this time, they make regular payments – pieces of which are used to pay off debts. Creditors likely won’t recoup all the money they are owed, but at least see some of it.

At the end of this repayment plan, whatever unsecured debts remain are then discharged, meaning those debts are essentially wiped away.

What happens to medical debt

Medical bills are considered unsecured debt, meaning they are eligible to be discharged at the end of a Chapter 13 bankruptcy repayment plan. At that point, you would no longer legally owe that money, and the creditor could not come after you for further payments.

It is the beginning of your fresh start.

It’s important to keep in mind bankruptcy can be a complicated process. There are many rules to follow, and a host of other considerations. A bankruptcy attorney can help determine the best solution for your unique situation, including whether Chapter 13 is even the right course of action.

No matter the case however, know there is light at the end of the tunnel. Whether your medical bills spun out of control, or a health issue prevented you from working – in turn impacting your ability to pay off debts – there are potential solutions to consider.