Do you need bankruptcy for medical debt in New York?
Usually not, and the reason is New York law rather than optimism. Since October 20, 2024, every hospital licensed in the state must apply the amended financial assistance law: free care at or below 200% of the federal poverty level, charges capped at 10% of the Medicaid rate up to 300% and 20% up to 400%, no asset test, and a written decision within 30 days. A hospital may not sue a patient under 400% of the poverty level, and no hospital may send an account to collections or sue within 180 days of the first bill.
Separate laws cover every medical provider. Since November 23, 2022, hospitals and health care professionals may not garnish wages or place a lien on your primary residence to collect a medical debt judgment. A medical debt lawsuit must be filed within three years of treatment, and interest on a consumer debt judgment is capped at 2% a year. Every New York medical debt law, with the date it took effect.
Put together: for a household under 400% of the poverty level, a New York hospital bill can usually be reduced, often to zero, and cannot be collected through the tools that make debt dangerous. Bankruptcy exists to stop collection; in this case, the law has already done much of that.
When bankruptcy does become relevant
The protections above have edges, and bankruptcy enters at those edges.
- The medical bill became credit card debt. A hospital bill paid with a credit card or a medical credit card is no longer medical debt. The 180 days, the assistance tiers, the credit-reporting ban and the interest cap all stop applying.
- The bill came from outside New York. A hospital in another state follows that state’s law.
- Medical debt is one part of a larger pile. Rent arrears, personal loans and credit cards follow ordinary debt rules, and an income drop from illness often brings all of them at once.
- There is already a judgment. A judgment from before the 2022 law, or a lien recorded before then, was not lifted automatically.
- Your income is above 400% of the poverty level and the reduced bill is still beyond what you can pay over time.
- Bills from physician groups, labs or ambulance companies are not covered by the hospital assistance tiers, although the garnishment, lien, time-limit, interest and credit-reporting rules still apply.
Your situation and what to do
| Your situation | What to do first |
|---|---|
| An unpaid New York hospital bill, household under 400% FPL | Apply for hospital financial assistance; bankruptcy is rarely the answer |
| A collector calls about a hospital bill | Ask for written validation and apply for assistance anyway; the letter to send |
| You were served with a lawsuit over a medical bill | Answer by the deadline and call free legal services the same week |
| The treatment was more than three years ago | Raise the time limit; the period to sue has passed |
| You put the hospital bill on a credit card | Ask the hospital in writing whether its assistance policy can still reach that charge; otherwise the card balance is ordinary debt |
| Medical bills plus credit cards, loans or rent arrears you cannot cover | Get a free bankruptcy consultation before choosing between Chapter 7, Chapter 13 or neither |
| A wage garnishment or home lien for medical debt | Get legal help; for New York medical debt since November 2022 these are barred |
Chapter 7 and Chapter 13 in plain terms
Federal law governs bankruptcy, and the federal courts publish the basics. Here is how the two consumer chapters work, as general information.
| Chapter 7 | Chapter 13 | |
|---|---|---|
| What it is | Liquidation: a trustee sells property that is not exempt and pays creditors; most remaining debts are discharged | A repayment plan from regular income; you keep your property |
| Length | Discharge usually about 60 to 90 days after the first date set for the meeting of creditors | 3 years if income is below the state median, 5 years if above, never longer than 5 |
| Medical bills | Ordinary medical bills are unsecured debt and are not on the list of debts that survive | May be paid less than in full, but at least what they would get in Chapter 7 |
| Who it suits | People with low income and few non-exempt assets | People with regular income who want to protect a home or catch up on a mortgage |
| Income test | A means test applies if income is above the state median | Debt limits apply: unsecured debts under $526,700 |
| Others on the debt | Not protected | A codebtor stay generally stops collection of consumer debts from a co-signer |
What survives a discharge. Some debts are not wiped out: support and alimony, certain taxes, certain education loans, debts for willful and malicious injury, and certain criminal restitution, among others. The federal courts report that individuals receive a discharge in more than 99% of Chapter 7 cases that are not dismissed or converted.
The automatic stay. Filing stops most collection activity right away: lawsuits, wage garnishments and demand calls. That is the immediate effect most people are after.
Exemptions. What property you can keep depends on federal law or the law of your home state, and the choice between them is one of the reasons to have a lawyer look at the case.
Fees. There is a court filing fee. With court permission it can be paid in up to four installments, and it may be waived if income is below 150% of the poverty level and you cannot pay even in installments.
Two required courses. Credit counseling from an approved agency within 180 days before filing, and a financial management course before the discharge. Missing the second one can cost you the discharge.
Where New Yorkers file, and free help
New York City is split between two federal bankruptcy courts. The Eastern District covers Brooklyn (Kings), Queens and Staten Island (Richmond), along with Nassau and Suffolk. The Southern District covers Manhattan (New York County) and the Bronx, along with several counties to the north. Both courts list free legal clinics for people filing without a lawyer.
Free or low-cost bankruptcy help listed by the Eastern District court:
| Organization | Phone | Who it serves |
|---|---|---|
| City Bar Justice Center, Consumer Bankruptcy Project | (212) 626-7383 | Residents of all five boroughs, income requirements |
| Legal Services NYC, NYC Bankruptcy Assistance Project | (646) 442-3630 | All five boroughs, income requirements |
| Brooklyn Legal Services Corporation A | (718) 487-2310 | Low- and moderate-income residents of all five boroughs |
| MFJ Legal Services | (212) 417-3799, Wednesdays 2 to 4 p.m. | Low-income residents of all five boroughs |
| Access Justice Brooklyn | (718) 624-3894 | Brooklyn residents, income requirements |
| Queens County Bar Association, Volunteer Lawyers Project | (718) 739-4100 | Low-income Queens residents |
| Legal Aid Society, Queens Neighborhood Office | (718) 286-2450 | Low-income Queens residents |
The Eastern District also staffs a Pro Se Law Clerk in Brooklyn at 271-C Cadman Plaza East, reachable at (347) 394-1700; the court asks people to call before visiting because hours change.
What to do before deciding anything
- Sort the pile into hospital, other providers and everything else. Each group follows different rules.
- Apply for financial assistance at every New York hospital you owe, on the state’s uniform application, even if the account is with a collector. Documents and timing.
- Ask each other provider for an itemized bill and its hardship policy, and propose a payment plan in writing if a balance remains.
- Write down the date of treatment for each bill. Anything over three years old can no longer be the subject of a new lawsuit.
- Do not move medical bills onto a credit card or a loan while you sort this out.
- If court papers arrive, answer them by the deadline, then call free legal services.
- Only then compare the remaining total with your income, and take that number to a bankruptcy consultation.
Questions people ask
Can medical debt be discharged in bankruptcy?
Generally yes. Ordinary medical bills are unsecured debt and are not on the federal list of debts that survive a Chapter 7 discharge. A lawyer can confirm how that applies to your own debts.
Should I file bankruptcy for medical bills in New York?
Often not for medical bills alone. New York hospitals must reduce or forgive bills up to 400% of the poverty level, may not sue below that line, and may not garnish wages or put a lien on your home. Get a free consultation before deciding.
Can a hospital garnish my wages for medical debt in New York?
No. Since November 23, 2022, hospitals and health care professionals may not garnish wages or place a lien on a primary residence to collect a medical debt judgment.
What is the difference between Chapter 7 and Chapter 13 for medical debt?
Chapter 7 discharges most unsecured debts, including ordinary medical bills, usually within a few months. Chapter 13 is a three- or five-year repayment plan that can pay unsecured creditors less than in full while you keep your property.
Where can I get free bankruptcy help in NYC?
The City Bar Justice Center’s Consumer Bankruptcy Project at (212) 626-7383 and the Legal Services NYC Bankruptcy Assistance Project at (646) 442-3630 both serve all five boroughs, with income requirements.
Does medical debt consolidation help?
Moving hospital bills into a loan or credit card turns them into ordinary debt and ends New York’s medical debt protections for them. Apply for financial assistance before considering any consolidation.
Sources
- United States Courts — Chapter 7 bankruptcy basics (checked 2026-10-29)
- United States Courts — Chapter 13 bankruptcy basics (checked 2026-10-29)
- U.S. Bankruptcy Court, Eastern District of New York — free and low-cost legal services and pro se law clerk (checked 2026-10-29)
- U.S. Bankruptcy Court, Eastern District of New York — counties served (checked 2026-10-29)
- U.S. Bankruptcy Court, Southern District of New York — counties served and free legal clinic (checked 2026-10-29)
- New York State Attorney General — Hospital financial assistance (checked 2026-10-07)
- NYS Department of Health — Dear CEO letter DAL 24-01 (October 18, 2024) (checked 2026-09-07)
More in Medical Debt in New York: What Collectors Can and Cannot Do
- Hospital Payment Plans in New York: The 5% Cap, the 2% Interest Limit and the Order to Ask — A New York hospital payment plan can't cost more than 5% of your gross monthly income or charge over 2% interest. Calculate your cap and what to ask first.
- Medical Debt on Your Credit Report in New York: What the Law Says and What Actually Happens — New York has banned credit reporting of medical debt by hospitals and providers since December 2023. A federal court fight clouds that. How to dispute an entry.
- What Happens If You Don't Pay a Medical Bill in New York: The Timeline, Step by Step — In New York an unpaid hospital bill can't go to collections for 180 days, can't legally go on your credit report or lead to garnished wages. The full timeline.
This page explains how the system works. It is not medical advice. More.