Behind on Medical Bills? Chapter 7 Could Offer Relief

 Posted on July 07, 2025 in Bankruptcy

Medical debt is one of the leading causes of financial troubles in North Carolina and across the United States. Whether due to a sudden emergency, a chronic or severe illness, gaps in insurance, or high deductibles, overwhelming medical bills can quickly spiral out of control. With more than 100 million Americans owing $220 billion in medical debt, it is estimated that at least 66 percent of those who file for bankruptcy cite medical debt as the primary cause.

Discharging your medical debt through Chapter 7 bankruptcy could provide relief and give you a fresh start. Consulting with an experienced Charlotte, NC bankruptcy attorney can provide you with the answers you need to help determine whether filing for Chapter 7 bankruptcy is the right choice for you.   

How Does Chapter 7 Bankruptcy Work?

Chapter 7 bankruptcy, also known as "straight bankruptcy," allows financially struggling individuals to eliminate most of their debt by liquidating non-exempt assets. First, your bankruptcy attorney will help you determine whether you qualify for Chapter 7 bankruptcy. You must pass a means test that compares your income to North Carolina’s median income for your household size. Generally, if your income is below the median, you will be eligible.

If you qualify for Chapter 7 bankruptcy, your attorney will file a petition in bankruptcy court, along with required documentation. A trustee will then be appointed, who will review your assets. Some assets are considered to be protected from bankruptcy and are known as allowable exemptions. Non-exempt assets can be sold to pay your creditors.  

Are Medical Bills Dischargeable Through Chapter 7 Bankruptcy?

Most personal debts are dischargeable through Chapter 7 proceedings, including medical debt. Although medical debt does not get special treatment during a bankruptcy filing, it is considered unsecured, non-priority debt (a type of debt where no property has been put up as collateral to secure payment).

Medical creditors, like creditors for other unsecured debt, will receive only what the law determines you can pay from the liquidation of assets. There is no limit to the amount of medical debt that can be discharged during Chapter 7 bankruptcy. The Consumer Finance Protection Bureau (CFPB) also finalized a rule that removes medical debt from credit reports and prohibits lenders from making credit decisions based on medical debt.  

Can I Keep My Property and Assets When I File for Chapter 7 Bankruptcy?

You may be worried about losing your homes in a Chapter 7 bankruptcy, but most people will keep all or most of their property. Allowable exemptions are found in Article 16 § 1C-1601 and include:

•  $35,000 in real property or personal property that you use as a residence ($60,000 if you are an unmarried debtor who is 65 years of age or older)
• Up to $5,000 for your interest in any property
• Up to $3,500 in value for one motor vehicle
•  Up to $5,000 in household furnishings, clothing, appliances, animals, musical instruments, or crops

Concerns Regarding the Discharge of Medical Debt Through Chapter 7 Bankruptcy

You may worry whether you will be able to keep your doctor and continue to receive medical treatment following filing for Chapter 7 and having your medical debts discharged. Filing for Chapter 7 does not disqualify you from future healthcare access or terminate your doctor-patient relationship. Some healthcare providers may be hesitant to treat individuals with significant amounts of discharged medical debt, but most will continue to provide care.

Contact a Mecklenburg County, NC Bankruptcy Lawyer

If you feel as though you are drowning in medical debt and other unsecured debts, the best step you can take is to speak to a knowledgeable Charlotte, NC bankruptcy attorney from Blossom Law PLLC. Attorney Blossom also assists small businesses experiencing financial difficulties, as he understands the challenges they face in obtaining affordable legal advice. Call 704-256-7766 to schedule your free consultation.