Written by Steve Rhode, consumer debt expert since 1994 • Last updated May 28, 2026
Quick Answer: A hospital, doctor’s office, or debt collector has filed a lawsuit against you for unpaid medical bills. You have the right to respond — and you must, usually within 20 to 30 days depending on your state. Medical debt is fully dischargeable in bankruptcy, and filing triggers an automatic stay that immediately freezes the lawsuit. You may also qualify for hospital financial assistance that could reduce or eliminate the bill entirely — even after being sued. Don’t ignore the lawsuit. It gets worse, not better.
What Just Happened With Your Medical Bill
A healthcare provider or a debt collector who bought your medical debt has gone to court and filed a civil lawsuit against you. This usually happens after the original bill went unpaid for months — sometimes years — and the hospital either hired a collection agency or sold the debt to a debt buyer for pennies on the dollar.
Here’s what most people don’t realize: many people being sued for medical debt never received proper notice of financial assistance programs they were entitled to. Under IRS Section 501(r)(4), every nonprofit hospital is required to have a written financial assistance policy — and most hospitals are nonprofits. If you weren’t screened for charity care before being sent to collections, the hospital may have violated its own obligations.
The Mistake You’re About to Make: Ignoring the lawsuit because you can’t afford the bill. If you don’t respond by the court deadline, the hospital or collector gets a default judgment — and that gives them the power to garnish your wages, freeze your bank account, or place a lien on your home. The debt doesn’t go away. It gets legally enforceable weapons attached to it. Read your options below before you do anything — or nothing.
Your Options Right Now
Do Not Miss Your Court Deadline. You must file a written response (called an “Answer”) with the court — usually within 20 to 30 days of being served. If you miss this deadline, you lose automatically. Everything below — charity care, negotiation, bankruptcy — works better when you have NOT already lost by default. Find your deadline first. Then read your options.
What to Do in the Next 48 Hours
- Read the lawsuit paperwork carefully. Find the deadline to respond (usually 20-30 days from when you were served). Write it down. Miss this date and you lose by default.
- Check if the hospital is a nonprofit. Most are. If it is, you have a right to apply for financial assistance under federal law. Call the hospital billing department and ask for a charity care application — this can reduce or eliminate the bill entirely, even after a lawsuit is filed.
- Request an itemized bill. Hospitals regularly make billing errors. Ask for a line-by-line breakdown. The Centers for Medicare & Medicaid Services has documented widespread billing errors, and the American Medical Association estimates up to 12% of medical claims contain inaccurate codes. Disputing incorrect charges can reduce what you owe.
- Consult a bankruptcy attorney this week. Medical debt is fully dischargeable in both Chapter 7 and Chapter 13 bankruptcy. Filing bankruptcy triggers an automatic stay under 11 U.S.C. § 362 that immediately freezes the lawsuit, any garnishment, and all collection activity. Find a bankruptcy attorney through NACBA — most offer free consultations. Take the 2-minute bankruptcy quiz to see if the math favors a fresh start.
- Talk to someone who isn’t selling you anything. Talk to Damon Day for free about your full situation — he doesn’t earn a commission on enrolling you in anything. Damon Day, an independent debt coach and my co-host on the Get Out of Debt Guy podcast, whom you can reach at DamonDay.com — I receive no payment for this referral. Or contact NACA to find a consumer attorney who can help you respond to the lawsuit.
How to Actually Stop It — Your 5 Paths
- File bankruptcy (fastest). The automatic stay stops the lawsuit the moment you file — not weeks later, immediately. Medical debt is unsecured and fully dischargeable. Federal Reserve research shows bankruptcy filers recover faster than people who struggle through years of payment plans. Chapter 7 typically resolves in 3-4 months. Your retirement accounts are protected.
- Apply for hospital financial assistance (charity care). If the hospital is a nonprofit (most are), federal law requires them to have a financial assistance policy. Many cover patients earning up to 300-400% of the federal poverty level. In Oregon, hospitals can’t even send you to collections without screening you first. This can reduce or eliminate the bill — even mid-lawsuit.
- Negotiate directly. Hospitals regularly accept 20-60% of the original bill as settlement. If the debt was sold to a collector, they bought it for pennies — they’ll often settle for far less than face value. Get any agreement in writing before you pay a cent.
- Respond to the lawsuit and fight it. File an answer with the court before the deadline. Challenge the amount, dispute errors, raise the statute of limitations if the debt is old. If you can’t afford an attorney, find free legal aid through LSC.gov.
- What probably won’t work: debt settlement companies. They’ll charge you fees, tell you to stop paying, and the lawsuit keeps moving while they “negotiate.” By the time they act, you may already have a default judgment. Don’t pay someone to do what you can do yourself — or what bankruptcy does faster and more completely.
What You Need to Know About Your Rights
Americans carrying medical debt
in Medicare billing errors annually (CMS)
The Fair Debt Collection Practices Act (15 U.S.C. § 1692) protects you from abusive collection tactics by third-party collectors — they can’t threaten you, call at unreasonable hours, or misrepresent what you owe. If a debt collector (not the original hospital) is suing you, they must be able to prove they own the debt and that the amount is correct.
Under IRS Section 501(r), nonprofit hospitals must have a written financial assistance policy, make reasonable efforts to inform patients about it, and cannot use extraordinary collection actions (like lawsuits) without first determining whether the patient qualifies for assistance.
| Protection | What It Does | Who It Covers |
|---|---|---|
| Federal 501(r) | Nonprofits must offer charity care, screen before suing | Patients at nonprofit hospitals |
| Colorado | Bans medical debt from credit reports, limits collections | All patients |
| Oregon | Financial assistance up to 400% FPL, no collections without screening | All patients at hospitals |
| North Carolina | 50-100% bill discount for income ≤300% FPL | Medicaid patients, low-income |
| Virginia (July 2026) | Bans wage garnishment for eligible patients, interest caps | All patients (not yet in effect) |
| Maryland | No lawsuits on bills under $500 | All patients |
| Washington | Expanded charity care eligibility, income-based sliding scale | All patients at hospitals |
Statute of limitations on medical debt varies by state — in most states it ranges from 3 to 10 years. If the debt is past your state’s statute of limitations, you may have a defense. See the Medical Debt Complete Guide for state-specific details, or ask a NACA consumer attorney.
If you live in Colorado, Oregon, Virginia, North Carolina, Maryland, or Washington — you have additional state-level protections that may limit or prevent the lawsuit. See the Medical Debt Complete Guide for your state’s specific rules.
If the collector is harassing you, lying about the amount, or suing without proper documentation, file a complaint with the CFPB and your state attorney general. If you need legal help but can’t afford an attorney, find free legal aid through LSC.gov.
Steve’s Take
I filed bankruptcy in 1990 — and medical costs were part of the reason. Here’s what 30 years of helping people has taught me: medical debt is the least shameful debt there is, because nobody chooses to get sick. Yet it’s the number one driver of financial distress I see. The system broke the math — you didn’t. If a hospital is suing you for a bill you can’t pay, that’s not a moral failing. That’s a math problem with a legal solution. Look at your actual numbers, talk to an attorney, and make the decision that protects your future.
Free Tool — Wage Garnishment Calculator: Worried about your paycheck being seized? The free Wage Garnishment Calculator shows exactly how much creditors can legally take in your state — and some states prohibit garnishment entirely. Calculate My Risk →
Frequently Asked Questions
I’m being sued for medical debt — can I stop it?
Yes. Filing bankruptcy triggers an automatic stay under 11 U.S.C. § 362 that immediately freezes the lawsuit and all collection activity. You can also respond to the lawsuit, negotiate a settlement, or apply for hospital financial assistance — even after being sued. The one thing that guarantees you lose is doing nothing.
I filed bankruptcy — how fast does it stop a medical debt lawsuit?
Immediately. The automatic stay takes effect the moment your bankruptcy petition is filed with the court. The creditor must stop all collection activity, including the lawsuit, garnishment, and any contact with you about the debt. Not days later — the moment you file.
Free Tool — I'm Being Sued for Debt Guide: Being sued by a creditor or debt collector? The free I'm Being Sued Guide gives you a personalized action plan — deadlines, defenses, and options based on your state. Most states require a response within 20–30 days. Get My Action Plan →
Can a hospital sue me if I can’t afford the bill?
Legally, yes — but if the hospital is a nonprofit (and most are), federal law requires them to have a financial assistance policy and make reasonable efforts to inform you about it before pursuing extraordinary collection actions like lawsuits. If they didn’t screen you for charity care first, they may have violated their obligations. Ask for the financial assistance application now — it’s not too late.
What happens if I ignore the medical debt lawsuit?
The court enters a default judgment against you. That gives the creditor legal tools to collect: wage garnishment (up to 25% of disposable income under 15 U.S.C. § 1673), bank account levies, and property liens. A default judgment is much harder to fight than the original lawsuit. Respond before the deadline.
Will medical debt bankruptcy ruin my credit?
Bankruptcy stays on your credit report for 7-10 years — but the reality is more nuanced. Federal Reserve research shows that people who file bankruptcy recover their credit scores faster than people who grind through years of struggling to pay. And if you’re already being sued, your credit is already damaged. Bankruptcy stops the bleeding and starts the recovery.
My state removed medical debt from credit reports — does that help with the lawsuit?
Credit reporting and lawsuits are separate. Several states (Colorado, New York, and others) and the three major credit bureaus have removed or limited medical debt on credit reports. But that doesn’t stop a creditor from suing you or obtaining a judgment. The credit report protection helps your score; stopping the lawsuit requires action in court, negotiation, or bankruptcy.
I have health insurance — how can I still owe this much?
The average marketplace deductible in 2026 is over $5,000 for a silver plan and over $7,000 for bronze. Out-of-network charges, surprise bills, and coverage gaps can leave you owing thousands even with insurance. Having insurance doesn’t prevent medical debt — it just changes the math.
Can I negotiate the medical bill down even after being sued?
Yes. Hospitals regularly accept less than the billed amount — often 20-60% — because they know collecting the full amount through a lawsuit is expensive and uncertain. If a debt buyer is suing you, they paid pennies on the dollar for your debt and will often settle for a fraction. Always get the settlement agreement in writing before paying anything.
One more thing — everything I share here is based on 30 years of helping people through exactly this. But my advice is input for your decision, not the decision itself. Only you know your full situation. Talk to an attorney, look at your numbers, and make the choice that serves your future.
Important: This guide is for informational purposes only and is not legal advice. Laws vary by state, and your situation may have details that change what options are available to you. For legal advice specific to your case, consult an attorney licensed in your state. NACBA can help you find a bankruptcy attorney, NACA can connect you with a consumer attorney, or talk to Damon Day for free about your situation.
Key Takeaway: Being sued for medical debt is serious but not permanent. You have legal protections, you may qualify for financial assistance you were never told about, and medical debt is one of the easiest types to discharge in bankruptcy. Compare all your options. Talk to an attorney this week. The longer you wait, the fewer options you have.
The Bottom Line
You’re not bad with money — the medical system created a bill that broke the math. The law created protections for exactly this situation. The people who acted quickly — who responded to the lawsuit, applied for charity care, or talked to a bankruptcy attorney — did better than the people who froze. If someone you know is being sued for a medical bill, send them this page — they need to know they have options before the court deadline passes. See the full Medical Debt Guide or take the Find Your Path quiz.
Before a medical bill becomes a lawsuit, know that how to appeal a Medicare Advantage rehab denial before it becomes debt.
Before a medical debt lawsuit gets filed, you may have received a threat. See what to do at that stage: A Debt Collector Is Threatening to Sue Me Here’s What to Do Right Now.
Dealing With Debt? Understanding your options is the first step. See how all your debt relief options compare — including ones most sites won’t tell you about. The Find Your Path quiz gives a recommendation based on your actual numbers, and the Scam-O-Meter checks any company’s complaint history before you sign. Federal Reserve research shows bankruptcy filers recover faster than those who don’t file.
If the bill that started this came from an out-of-network provider, read what to do if you got a bill from an out-of-network doctor first — you may not owe it.
Right now you are dealing with the thing in front of you, and that is exactly where your attention belongs. When it is handled — and it will be — there is a next stage, and it is the one I most enjoy writing about.
In the latest issue (Oct 16): The check that looks like a scam may be real
Each weekday I send one short email: one money story that caught my attention, why it might matter to you, and one manageable thing you can do with it. It is free, I sell nothing, and I take no money from any company I write about.
