Medical debt is among the most common drivers of consumer bankruptcy filings. This research project tracks medical-debt-driven filings, discharge outcomes, the recent CFPB credit-reporting rule changes, and per-district patterns in medical-driven bankruptcy.
Studies have estimated that medical debt is a contributing factor in roughly 30-60% of consumer bankruptcy filings, depending on methodology. The wide range reflects definitional ambiguity:
Medical debt is generally fully dischargeable in Chapter 7 and Chapter 13 as unsecured debt. Unlike student loans or recent tax debt, there are no special rules limiting medical-debt discharge. This makes bankruptcy one of the most effective tools for medical-debt resolution when other options (negotiation, charity care, payment plans) have been exhausted.
The exception is medical debt secured by liens (rare but exists in some states for unpaid hospital bills). Secured medical debt follows standard secured-debt rules in bankruptcy.
In January 2025, the Consumer Financial Protection Bureau finalized a rule prohibiting most medical debt from appearing on consumer credit reports. The rule: