Medical Debt and Bankruptcy

Medical Debt and Chapter 7 Bankruptcy: A Path to Financial Relief in South Carolina


Medical debt is a pervasive issue that affects millions of Americans and South Carolinians, pushing them into financial distress and overwhelming circumstances. Unexpected medical emergencies and rising healthcare costs can quickly accumulate into insurmountable debts, leaving individuals and families struggling to make ends meet. Fortunately, for those drowning in medical debt, Chapter 7 bankruptcy and Chapter 13 bankruptcy can be a viable solutions to find financial relief and a fresh start. In this blog, we will explore the implications of medical debt, the benefits of Chapter 7 bankruptcy, and how it can pave the way for a brighter financial future individuals living in South Carolina.

Understanding Medical Debt / Medical bills

Medical debt and medical bills arise when individuals are unable to cover their medical expenses, whether it be due to a lack of insurance, high deductible plans, or simply the inability to keep up with mounting healthcare costs. Unexpected illnesses, surgeries, or chronic conditions can lead to overwhelming medical bills that can be hard to manage alongside other financial obligations. In addition as Dave Ramsey often says, consumers often do not have have money set aside for medical emergencies.

The Devastating Impact of Medical Debt

Medical debt in South Carolina has far-reaching consequences beyond just financial strain. It can adversely affect mental health, causing stress, anxiety, and depression. Many individuals find themselves forced to make difficult choices between paying medical bills and meeting basic needs like rent, groceries, or utilities. In extreme cases, people may delay seeking necessary medical care due to fear of incurring more debt, jeopardizing their well-being.

Chapter 7 Bankruptcy: An Overview

Chapter 7 bankruptcy, also known as “liquidation bankruptcy,” is a legal process that allows individuals to discharge most of their unsecured debts, including medical debt. Unlike Chapter 13 bankruptcyChapter 13 bankruptcy, which involves a repayment plan, Chapter 7 bankruptcy offers a quicker and more straightforward path to debt relief.

Eligibility for Chapter 7 Bankruptcy

To qualify for Chapter 7 bankruptcy, individuals must meet certain criteria, including passing the “means test.” The means test evaluates an individual’s income and compares it to the median income of their state. If the income is below the median, they are generally eligible for Chapter 7 bankruptcy. However, even if their income exceeds the median, there may be other factors that could still allow them to file for Chapter 7.

The Automatic Stay

One significant advantage of filing for Chapter 7 bankruptcy is the automatic stay. Once the bankruptcy petition is filed, creditors are legally prohibited from taking any collection actions, including harassing phone calls, wage garnishments, or lawsuits. The automatic stay provides much-needed breathing room for individuals to regroup and rebuild their financial situation.

Discharging Medical Debt

In a Chapter 7 bankruptcy, medical debt is classified as unsecured debt and can typically be discharged completely. This means that individuals are no longer legally obligated to repay those medical bills, providing them with a fresh financial start. However, it’s essential to note that certain medical debts, such as those incurred through fraud or malpractice, may not be dischargeable.

Protecting Assets

Contrary to popular belief, Chapter 7 bankruptcy doesn’t always entail losing all assets. Each state has specific exemptions that allow individuals to protect essential assets like homes, cars, and personal belongings up to certain values. These exemptions vary, so it’s crucial to consult with a bankruptcy attorney to understand how they apply to a particular situation.


Medical debt can have devastating effects on individuals and families, pushing them to the brink of financial ruin. However, Chapter 7 bankruptcy offers a lifeline to those burdened by overwhelming medical debt. It can provide relief from unsecured debts, including medical bills, and grant a fresh financial start. If you find yourself grappling with medical debt and unable to cope with the mounting financial pressure, exploring the option of Chapter 7 bankruptcy with the guidance of a knowledgeable attorney may be the first step toward reclaiming control of your financial future. Remember, it’s essential to seek professional advice and fully understand the implications before making any decisions.

Stone Law Firm has offices in Columbia, Greenville, and Florence but we also help people from every city in South Carolina to include Charleston and Spartanburg.


- Stone Law Firm