Filing Bankruptcy for Medical Debt in Colorado

• Medical debt is fully dischargeable in bankruptcy as long as you list every provider when you file. 

• If you file in Colorado, you must use Colorado’s exemptions instead of the federal ones. 

• Colorado protects up to $250,000 of home equity, or $350,000 if you, your spouse, or a dependent is 60 or older or has a disability. 

• Health Savings Accounts (HSAs) are protected from creditors and bankruptcy in Colorado as of April 7, 2022. C.R.S. § 13-54-102(1)(s)

• Colorado limits how hospitals and “medical creditors” collecting on their behalf can collect medical debt.

• Interest on medical debt is capped at three percent under C.R.S. § 5-12-103. 

• Medical debt cannot appear on credit reports under Colorado law. C.R.S. § 5-18-109 (The credit report ban is being challenged in federal court and is scheduled to end on July 1, 2028.)

In most cases, yes. Under the federal Bankruptcy Code, a medical bill counts as a claim, meaning that a debt collector has the right to payment, even if it has not gone to judgment or its validity is disputed. 11 U.S.C. § 101(5). 

While filing for bankruptcy can address many kinds of personal debts, relief from unpaid medical bills is a leading driver behind roughly 60 percent of consumer filings, according to the American Bankruptcy Institute. In April 2026, the Colorado Consumer Health Initiative found that more than one in three adults reported delaying necessary medical care due to cost. 

Online forums are filled with cautionary tales of people with medical debt who filed for bankruptcy, had their debts discharged, and thought they were in the clear, only for more collection agencies to surface out of nowhere, pursuing medical debt.

Here’s why medical bills can survive bankruptcy: every unpaid medical bill needs to be listed in the bankruptcy filing for it to be discharged; otherwise, you risk it surviving if the creditor did not receive timely notice of your case. 11 U.S.C. 523(a)(3). 

Unfortunately, medical debt can feel like a rigged game of whack-a-mole, and I know how easy it is to overlook one of many providers, labs, or collection agencies. It’s an honest mistake, but even one that can undermine your fresh start. 

You can avoid this trap by working with an experienced Colorado bankruptcy attorney who audits the assets and debts you disclose to ensure that every provider, lab, and collection agency is accounted for. You should also review your medical records and keep a list of providers with their addresses and an estimate of what is owed to them.  

Two of the most common chapters for individual consumer debtors are Chapter 7 and Chapter 13. Each treats medical debt differently, and the differences are important. 

A Chapter 7 discharge wipes out debts that arose before the date of the order for relief, even if the hospital or collector never files a claim in your case 11 U.S.C. 727(b)

In Chapter 13, you repay part of your debts through a court-approved plan. After you finish the plan payments, the court discharges the remaining debts covered by the plan. 11 U.S.C. 1328(a)

Whether you qualify for Chapter 7 depends on the means test. Chapter 13 has its own eligibility limits—explore your Ch. 13 eligibility in this recent article.

It’s difficult to think you could lose your home and other property because you chose to seek the health care you or a loved one needed. The good news is, as a Coloradan, you have certain protections (called exemptions) that protect some of your property and assets. Which ones and how much they are depend on the bankruptcy chapter you file under. Let’s look at some of the assets you may be able to protect, starting with your home:  

• Your home - The homestead exemption protects $250,000 of equity, or $350,000 if the home is occupied by an owner, spouse, or dependent who is 60 or older or disabled C.R.S. 38-41-201. You must occupy the home C.R.S. 38-41-203. Proceeds from selling the homestead are exempt for three years if you keep them separate. C.R.S. 38-41-207

• Health savings accounts - Since April 7, 2022, HSAs are exempt alongside pension, retirement, and deferred compensation plans C.R.S. 13-54-102(1)(s). 

• Medical equipment - Professionally prescribed health aids (such as a prescribed wheelchair or hearing aids) for you or a dependent are exempt C.R.S. 13-54-102(1)(p). 

The bankruptcy trustee (a court-appointed administrator who oversees a bankruptcy case) or a creditor generally has 30 days to object to a claimed exemption. The clock runs from either your meeting of creditors or the filing of an amended exemption list or supplemental schedule, whichever is later. If an exemption was claimed fraudulently, the trustee has until one year after the case closes to file an objection to the exemption claim. Fed. R. Bankr. P. 4003(b)(2)

Learn more about the Chapter 7 and Chapter 13 bankruptcy processes on our website. 

I strongly advise individuals considering bankruptcy as a solution to mounting medical debt to look into the non-bankruptcy protections available to Colorado residents. You can use these protections to buy yourself some time while deciding whether to file or to show a collector has crossed a legal line. 

• Screening for discounted care - Beginning September 1, 2022, Colorado’s Hospital Discounted Care law requires covered health-care facilities to screen patients for public coverage and discounted care under C.R.S. 25.5-3-502.

• Charge and payment limits - For qualified patients, the law limits charges and caps monthly payments. 

• Collections end after 36 months - After a cumulative 36 months of payments, the facility must consider the patient’s bill paid in full and permanently cease any and all collection activities on any balance that remains unpaid. 

Colorado has barred credit bureaus from reporting adverse medical debt information since August 2023. This law is scheduled to sunset on July 1, 2028. Debt collectors challenged the law in federal court in November 2025 under ACA International v. Fulford, No. 1:25-cv-03530, D. Colo. As of September 2026, the court had not ruled on the challenge. 

Note that the ban does not apply to credit transactions above the federal conforming loan limit. C.R.S. 5-18-109

If medical bills are piling up and you are trying to understand whether bankruptcy or another legal remedy can help, an attorney who regularly handles these cases can give you clarity. It is also important to know that there are limits to how frequently a bankruptcy may be filed. If you expect medical bills to continue in the near future, you should let your attorney know. Legal guidance is most valuable when:

• A hospital or collector has sent a 30-day notice of an extraordinary collection action, or has taken you to court.

• A collector has threatened to report your medical debt to a credit bureau.

• You are not sure whether Chapter 7 or Chapter 13 is the right legal tool for your situation.

• You want to protect your home equity, health savings account, or retirement funds.

• You are thinking about selling property or moving money before you file. 

At Robinson & Henry, our Bankruptcy Team represents Coloradans weighed down by medical debt, including Chapter 7 and Chapter 13 filings designed to wipe out medical bills while protecting what they can keep under Colorado law. We understand how stressful it is to face collectors while managing your health. Call 303-688-0944 or book a consultation online 24/7.