Can Bankruptcy Eliminate Medical Debt in Tennessee?

Medical debt can be overwhelming, especially in a state like Tennessee, where healthcare costs can be significant. Many individuals find themselves struggling to manage these debts, leading them to consider their options, including bankruptcy. So, can bankruptcy eliminate medical debt in Tennessee? Let’s explore this topic in detail.

In Tennessee, as in many other states, medical debts are considered unsecured debts. This means they are not backed by any collateral, unlike secured debts such as a mortgage or car loan. If you file for bankruptcy, unsecured debts can often be eliminated, allowing you to have a fresh financial start.

There are two primary types of bankruptcy that individuals can file for: Chapter 7 and Chapter 13. Chapter 7 bankruptcy allows for the quick discharge of most unsecured debts, including medical debt, within a few months. However, applicants must pass a means test to qualify. If your income is below the state median, you may be eligible for Chapter 7 bankruptcy, which can wipe out most of your medical expenses.

On the other hand, Chapter 13 bankruptcy is more of a repayment plan. It allows you to keep your assets while repaying a portion of your unsecured debts over three to five years. If you have a steady income but are struggling to pay your medical bills, Chapter 13 may be the right option for you. At the end of the repayment period, any remaining unsecured medical debts can be discharged.

It's important to consider that while bankruptcy can provide relief from medical debt, it can have long-term effects on your credit score. A bankruptcy filing will remain on your credit report for up to 10 years, which can impact your ability to secure new credit and other loans in the future.

Additionally, not all medical debts might be eliminated through bankruptcy. If you have a secured debt related to medical expenses, such as a financed medical procedure, this might not be discharged. In such cases, consulting with a bankruptcy attorney can provide clarity on what debts can be included in your bankruptcy filing.

Another aspect to consider is the potential for medical billing errors. Before deciding to file for bankruptcy, it’s worth reviewing your medical bills for any inaccuracies. Overcharges and billing mistakes are common, and correcting them may reduce your debt significantly.

If you are contemplating bankruptcy as a means to eliminate medical debt in Tennessee, seeking advice from a qualified bankruptcy attorney can be invaluable. They can guide you through the complex laws and help you understand the best course of action based on your specific financial situation.

In summary, yes, bankruptcy can eliminate medical debt in Tennessee, especially if you qualify for Chapter 7 or are considering Chapter 13 repayment plans. However, it’s crucial to evaluate all your options and understand the implications of filing for bankruptcy before proceeding.