U.S. medical debt has unique features. A single ER visit can produce a five-figure bill, and Korean American clients without insurance — self-employed individuals, newly arrived families — are particularly exposed. The good news: medical debt is general unsecured debt under the Bankruptcy Code and is fully dischargeable in Chapter 7.
Option 1 — NJ Charity Care
Most NJ hospitals operate Charity Care programs under N.J.A.C. 10:52-11. Households at or below 200% of the federal poverty level qualify for full waivers; up to 300% receive sliding-scale discounts.
Option 2 — NY Hospital Financial Assistance
New York’s protection is even stronger. Under the 2007 Hospital Financial Assistance Law (Public Health Law § 2807-k), NY residents at or below 300% of poverty are limited to Medicare-rate charges. A 2022 NY amendment also shortened medical-debt credit reporting from 7 years to 3 years.
Option 3 — Chapter 7 Discharge
If medical and other unsecured debts have accumulated and Means Test is passed, Chapter 7 discharges all unsecured debt (including medical) within 4–6 months of filing.
Option 4 — Chapter 13 Reorganization
When the client wants to protect specific assets (home, car) and has stable income, Chapter 13 spreads medical debt and other unsecured claims over 3–5 years. The discharge percentage is based on disposable income.
Patient Rights (FDCPA 15 U.S.C. § 1692)
Debt collectors may not: (1) reveal the debt to employer or family, (2) threaten or harass, (3) misrepresent facts, or (4) garnish wages without judgment. Violations may support a damages claim.
FAQ
Q. Can we challenge the insurer’s denial at the same time?
Yes. Where medical debt arises from a wrongful denial of coverage, Song Law Firm pursues a parallel appeal or lawsuit against the insurer — recovery of coverage eliminates the debt altogether.
Our Commitment
Song Law Firm helps Korean American clients across NJ and NY navigate every step — pre-filing creditor negotiations, asset protection strategy, and post-discharge credit recovery — in Korean, English, and Chinese. Our team serves Fort Lee, Bergen County, Hudson County, and the broader NJ–NY metro area.
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This column is for general informational purposes only and is not legal advice on any specific matter. Reading this article or contacting Song Law Firm does not create an attorney–client relationship. Please consult a qualified attorney for advice on your particular situation.
