Can You Clear Medical Debt By Filing For Bankruptcy in Ohio?
Filing for bankruptcy is usually the last resort for the indebted. When there is no way a person can repay their debt, they turn to court and ask for help. Filing for bankruptcy is basically telling your creditors that you cannot pay, and that liquidating your assets or implementing a repayment plan is the only way.
This brings us to the question at hand: can you clear your medical debt by filing for bankruptcy? What does the law say about it? Which bankruptcy type allows you to remove or clear your medical debt? Let us answer all of these questions and assess the pros and cons of each bankruptcy type.
Did you know? Ohio State has approved 69,000 patients for financial assistance in the past three years. [1] A recently proposed bill aims to ban wage garnishment in Ohio. It will cap interest at 3%, opposed to the current 8%. [1]
Will Bankruptcy Discharge Medical Debt?
Bankruptcy can discharge unsecured debt, specifically Chapter 7 or Chapter 13. Medical debt is considered unsecured and non-priority debt. This means the three main bankruptcy types (Chapter 7, 11, and 13) will eliminate said unsecured debt.
When filing for bankruptcy, there is no way to opt for a single type of debt to discharge. All of the debt will be discharged, and assets will be sold to repay priority debt.
In other words, filing for bankruptcy can be helpful, but you might also lose valuable assets. Or, get tied in a long-term repayment plan.
Are There Other Ways To Eliminate Medical Debt in Ohio?
You can opt for other options if bankruptcy is too much for you. There are specific debt programs and paths you can take. These differing options provide you with the chance to repay your debt in small installments.
Here are the main options you have:
HCAP
If your debt is not significant, then you may benefit from the Hospital Care Assurance Program (HCAP) available to Ohio citizens. If your income is below the poverty level, then you can apply for this program. In other words, you are only eligible if your income is below $32,150.
If you apply for this financial assistance, then debt collection efforts from creditors will be halted. The program can help you repay the debt you owe and give you more time. However, this will not discharge your medical debt unless you qualify or are deemed eligible.
Negotiation with the Hospital
You can negotiate directly with the hospital to pay your unpaid medical bills in installments. This can prevent you from having to file for bankruptcy or opt for wage garnishments. In some cases, negotiations lead to the discharge or reduction of debt.
For this, you will need a capable debt relief attorney who can help you through this. They can contact the hospital on your behalf and push for negotiations. However, this option may be off the table if you have been sued by the hospital already. In this case, the only option is to answer the lawsuit.
Ohio Health Assistance
OhioHealth is a non-profit system of hospitals that provides relief programs for healthcare costs. The financial assistance they provide can help you repay the debt that you may owe a medical facility or service.
Wage Garnishment
You can opt for wage garnishment to repay your debt in small amounts. This is a viable way to get rid of the debt without causing financial stress. If your debt is significant, i.e., $20,000 or above, then you can opt for a longer program.
The only downside is that this is usually only available for people with stable and disposable income. If the hospital or facility sues you, then your wages will be garnished according to the court’s order, not per your convenience.
Do You Qualify to Discharge Medical Debt Under Bankruptcy Law?
If you pass the means test for either of the three bankruptcy types, then you qualify to discharge your medical debt. Each bankruptcy process has specific requirements, and the means tests will assess whether you are eligible or not.
The following are the key qualifications for each bankruptcy type:
Chapter 7 Bankruptcy Qualifications:
- If you have income below the Ohio median, which is $67,000
- If your disposable income is insufficient to repay debt
- If you have sizable assets, which could repay debt after liquidation
Chapter 11 Bankruptcy Qualifications:
- If you are facing insurmountable debt that exceeds Chapter 13 limits
Chapter 13 Bankruptcy Qualifications:
- Income level must be regular, and a repayment plan of 3-5 years
- If your medical debt is below $465,000
- If your secured debt are not above $1,395,000
If you do not meet Chapter 13 bankruptcy requirements, then opt for Chapter 7 (liquidation bankruptcy) or Chapter 11.
If you are looking to file for bankruptcy due to the financial burden of your medical expenses, then you should speak to a bankruptcy lawyer. Call 937-748-1749 to get a free consultation from Richard West Law Office today.
Frequently Asked Questions (FAQs)
HCAP (Hospital Care Assurance Program) in Ohio offers charity care and discount programs. This program can reduce the medical expenses and provide assistance according to federal poverty guidelines. In some cases, it may eliminate certain bills, but other times, it will help you repay them partially.
If the medical bill is overwhelming or unmanageable, then filing for bankruptcy might be preferable. This usually applies to patients or families who have racked up significant credit card debt due to healthcare costs.
The Ohio Medical Debt Fairness Act has proposed banning wage garnishment for medical debt. If approved, the creditors will not be able to garnish wages for unpaid medical bills. However, the indebted patient can still negotiate a wage garnishment program.
Unsecured or non-priority debt includes car loans, fines and penalties, credit card debt, etc. In certain cases, tax debt may also be considered unsecured, depending on income level.
Contact the hospital’s billing department to request a discount or adjustments. You can cite financial help, as most hospitals offer and are required to offer payment plans to qualifying individuals. This includes payment plans that spread costs over months or years.
Source:
[1] Landers, K. (2025, November 14). Ohio lawmakers propose a bill to protect patients from medical debt collections and wage garnishment. 10tv.com. https://www.10tv.com/article/news/local/ohio-lawmakers-propose-bill-medical-debt-collections-wage-garnishment/530-6545e76e-3684-4aeb-841f-e968bb526db0
