Medical Debt and Personal Bankruptcy in 2025: What to Know
Medical debt has been a significant issue for Floridians for years now, and as of early 2025, it continues to be a problem for debtors in Florida and across the country. Indeed, according to LendingTree, about 55 percent of Americans have incurred medical debt that they have had to repay, and nearly 30 percent are still grappling with that debt. For about 17 percent of people who are struggling with medical debt, they do not expect to be able to pay it off for at least five years, and many Americans have admitted to charging medical debt on credit cards or taking early withdrawals from retirement accounts to pay. For those without such options, their medical debt has often gone into collections and their credit has been deeply impacted.
In 2025, changes were supposed to come to the way medical debt affects a person’s credit — to make the impact of medical debt less significant in terms of credit ratings and being eligible for credit in other realms. However, recent Consumer Financial Protection Bureau (CFPB) cutbacks and the Trump administration’s decision to halt CFPB rules from taking effect will have an impact on Floridians with medical debt. For many of those debtors, filing for bankruptcy may be the best option to deal with that debt and to prevent it from affecting their lives in an ongoing and material way.
CFPB Final Rule to Remove Medical Debt from Consumer Credit Reports
On January 7, 2025, the CFPB finalized a rule that would “ban the inclusion of medical bills on credit reports used by lenders and prohibit lenders from using medical information in their lending decisions.” While the rule would not mean that consumers would not owe medical debt they had incurred, simply having that debt would not result in their inability to buy a home or a car, or to be approved for other lines of credit. In total, the new rule would have removed about $49 billion in debt from American credit reports, and it was set to take effect 60 days following publication in the Federal Register.
However, as a recent report from American Banker indicates, the CFPB “has agreed to temporarily halt the rule that would ban medical bills from credit reports.” Given that the Trump administration has taken actions to significantly reduce the power of the CFPB, it is possible that the rule will never take effect. If the rule does not take effect, debtors throughout Florida will continue to have their lives weighed down by medical debt — even if it is the only significant debt they owe.
Bankruptcy and Discharging Medical Debt
Under the US Bankruptcy Code, debtors in Florida should still expect to be able to have their medical debt discharged in a bankruptcy filing.
In a Chapter 7 bankruptcy case, medical debt is usually dischargeable. In this type of bankruptcy, all non-exempt assets of a debtor will be liquidated, but the debtor can still retain a wide range of assets through Florida’s bankruptcy exemptions and typically expect for their medical debt to be discharged within an average of four to six months from filing. Medical debt can also be discharged at the end of a Chapter 13 bankruptcy case, although the discharge will not occur until the debtor completes the terms of the Chapter 13 repayment plan, which are usually for three to five years.
Contact Our West Palm Beach Bankruptcy Lawyers Today
Do you have questions about medical debt and bankruptcy? An experienced West Palm Beach bankruptcy lawyer at Kelley, Fulton, Kaplan & Eller can assist you. Contact us today for more information.
Sources:
lendingtree.com/debt-consolidation/medical-debt-burden-survey/
americanbanker.com/news/cfpb-agrees-to-temporarily-halt-medical-debt-rule
consumerfinance.gov/about-us/newsroom/cfpb-finalizes-rule-to-remove-medical-bills-from-credit-reports/
