Medical Debt, Answered Plainly
Whether a hospital can sue you, what medical bills do to your credit, New Mexico's special protections for low-income patients, and why bankruptcy erases medical debt completely. Answered by a licensed attorney.
Talk to a lawyer, free. Every case starts with a free debt analysis by phone or video — we look at your whole situation and tell you the truth, even if the answer is “do nothing.”
Can a hospital or doctor sue me over unpaid medical bills?
Yes — medical providers and the collection agencies they hire can sue like any other creditor, and in Arkansas they regularly do. But a lawsuit is the end of a long road, not the beginning: bills usually go through statements, collection calls, and credit reporting first, and every step is a chance to negotiate, apply for assistance, or mount a defense. In New Mexico, providers must clear extra legal hurdles before suing at all, and low-income patients generally can't be sued for medical debt.
Does medical debt hurt my credit score?
Less than it used to, but it still can. The three major credit bureaus no longer report paid medical collections or medical collections under $500, and unpaid medical collections don't appear until they're about a year old. A federal rule that would have removed medical debt from credit reports entirely was struck down by a court in 2025, so larger unpaid medical collections can still show up and drag your score down. Once a bill is paid, settled, or discharged in bankruptcy, the collection comes off.
I'm low-income in New Mexico. Can they even collect from me?
Often no. New Mexico's Patients' Debt Collection Protection Act bars hospitals, providers, and their collectors from pursuing collection — lawsuits, garnishment, liens, or selling the debt — against patients whose household income is at or below 200% of the federal poverty guidelines. Providers must also check for insurance and help uninsured patients apply for coverage and financial assistance before collecting from anyone. If a collector is chasing you anyway, they may be breaking state law — have it reviewed.
Can they garnish my wages over medical bills?
Only after suing you and winning a judgment — no one can touch your paycheck over an unpaid hospital bill alone. Even with a judgment, federal law caps garnishment at 25% of take-home pay, and low earners are protected entirely. Social Security, disability, VA benefits, and most retirement income can't be garnished for medical debt at all. If garnishment has started or been threatened, that's usually the moment bankruptcy or a defense makes obvious financial sense.
Can bankruptcy wipe out medical debt?
Yes, completely. Medical bills are ordinary unsecured debt — they discharge in Chapter 7 just like credit cards, with no dollar limit and no special category. There is no separate “medical bankruptcy,” but medical crises are one of the most common reasons honest people file. A Chapter 7 typically takes about four months, and a $5,000 bill and a $500,000 bill discharge exactly the same way. If medical debt is the biggest piece of your pile, bankruptcy usually clears the whole board at once.
The hospital bill is huge and I have no insurance. Do I just owe all of it?
Not necessarily. Nonprofit hospitals — which includes most large hospitals — are required by federal law to have financial assistance (charity care) policies, and many patients who qualify are never told. Uninsured patients are also routinely billed “chargemaster” rates far above what any insurer pays, which is a powerful negotiating point. Ask for the itemized bill, apply for financial assistance in writing, and negotiate from the insured rate — or have a lawyer do it as part of a bigger debt strategy.
Insurance should have paid this bill. Do I still have to?
Don't pay a disputed bill blindly. If the provider billed the wrong code, missed a filing deadline, or the insurer wrongly denied the claim, the fix is an appeal and a paper trail, not your checkbook. For emergency care and certain out-of-network situations, the federal No Surprises Act bars “balance billing” you for more than your in-network share. Put the dispute in writing to both the provider and insurer, and if it's been sent to collections anyway, dispute it there too.
My medical bills went to a collection agency. What now?
You gain rights when a third-party collector takes over: the federal Fair Debt Collection Practices Act limits when and how they can contact you, bars harassment and false threats, and lets you demand validation of the debt in writing. Collectors also buy or work medical accounts cheaply, which makes them flexible — settlements well below face value are common. Don't ignore them entirely, though: an ignored collection account is how a bill becomes a lawsuit, and an ignored lawsuit becomes a garnishment.
Can they take my house over medical debt?
Almost never directly. A medical creditor would have to sue, win a judgment, and record a lien — and even then, homestead law stands in the way. Arkansas's constitutional homestead protects your home without regard to value on up to a quarter-acre in town or eighty acres in the country. New Mexico protects $150,000 of home equity per person — often $300,000 for a couple. Forced sales of homes over medical bills are extraordinarily rare; liens are usually resolved, settled, or wiped out in bankruptcy.
Should I put medical bills on a credit card or take out a loan to pay them?
Usually not — it's one of the most common and costly mistakes. Medical debt is typically interest-free or low-interest, unsecured, negotiable, often eligible for charity care, and fully dischargeable. The moment you pay it with a credit card, it becomes high-interest card debt, the hospital is off the table for assistance or settlement, and you've spent money that might never have been legally collectible. Get the bill reviewed and negotiated first; borrow only as a last resort, if at all.
How long can they chase me for an old medical bill?
There's a deadline — the statute of limitations — and it's shorter than most people think: generally a few years from your last payment, roughly three to five in Arkansas and four to six in New Mexico depending on how the paperwork is structured. After that, a lawsuit filed against you can be thrown out, though collectors may still call and the debt may linger on your credit report for up to seven years. Careful: a small “good faith” payment can restart the clock. Have the dates checked before paying anything on an old bill.
What should I do first if medical debt is crushing me?
Don't pay in panic, and don't hide from it either. Gather the itemized bills, note what insurance paid and denied, and check whether you qualify for financial assistance — or, in New Mexico, whether the law bars collection against you entirely. Then get a free debt analysis: the answer may be an assistance application, a negotiated settlement, a defense to a lawsuit, or a Chapter 7 that erases the medical debt along with everything else. All of those beat years of minimum payments on a bill you may not fully owe.
Ready for a straight answer? Asa King is a licensed attorney (Arkansas & New Mexico, admitted to the 8th Circuit and the U.S. Supreme Court) who represents people — never debt collectors or debt buyers. Consultations are by phone or video, statewide.
This page is general legal information for Arkansas and New Mexico, not legal advice about your specific situation. Laws, court fees, and exemption amounts change. For advice you can rely on, speak with a licensed attorney. Attorney advertising.