Lefkovitz & Lefkovitz
Nashville Office 615-686-2279 Cookeville Office 931-400-2218
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Nashville Bankruptcy Law Blog

What to do if you are buried in medical debt

Even if you have high-quality, comprehensive health insurance, do not assume all your medical bills are completely covered. Depending on your situation, you could find yourself receiving one bill after the next.

If your medical debt mounts, it is critical to implement a plan for digging out.

Student loan debt discharged in bankruptcy case

Many people in Tennessee and across the country struggle with massive amounts of student loan debt. Historically, there have long been serious difficulties in discharging this debt in bankruptcy, even as the process can work effectively to handle other forms of unrepayable debt. One recent case of a law graduate, however, may indicate changing perspectives on how student loan debt can be assessed during bankruptcy proceedings.

To successfully discharge student loan debt during bankruptcy, courts apply a far harsher standard than they do to those who are seeking to escape from a mountain of credit card bills. The Brunner test aims to consider whether the person with debt can maintain some minimal standard of living if they continue to repay the loans, whether substantial hardship can be expected to continue for some time and whether the debtor had attempted to pay back the loans. Typically, people have faced extreme difficulty showing prolonged hardship. Many can only secure a discharge only after suffering a disability that has rendered them unable to secure an income.

Get a handle on your holiday debt now

The holiday season is behind you, but you might still have to take care of one aspect of the season – credit card bills. This can be a challenging situation, and it might even be overwhelming. Determining how to pay these off requires a plan, so you need to try to get things together now.

One of your first steps is to find out how much you actually owe. This is where many people get frightened or upset. Some don't think that the totals would have added up so quickly. While you are writing out your totals, make note of the minimum payments on each credit card. This will help you come up with a plan.

Can you protect home equity in Tennessee Chapter 7 bankruptcy?

If you are like most people living in Tennessee, your home is probably your most valuable asset. Nothing else you own, other than a well-funded retirement account, will have a similar value to that of residential real estate.

Many people spend years saving a down payment and much of their working life paying off their mortgage. It is only natural to want to do everything in your power to protect that investment. Many people will pay their mortgage even if they know they don't have enough money to pay their other bills that month. It makes sense that if you find yourself considering Chapter 7 bankruptcy, you would worry about the impact of your filing on your home equity.

The potential aftermath of a Chapter 7 case

Filing for Chapter 7 bankruptcy may help Tennessee residents and others eliminate some or all of their debts. However, some debts such as payroll taxes owed or back child support cannot be eliminated in a Chapter 7 filing. It is also unlikely that student loan debts will be discharged in such a proceeding unless a judge finds that doing so would constitute an undue hardship.

In most cases, filing for bankruptcy won't be the basis for an IRS audit. As 1.5 million people file for bankruptcy each year, it wouldn't be practical for the government to review the tax returns of everyone who does so. Instead, the IRS focuses on those who don't file or pay taxes in a timely manner. In some cases, debts that were paid in full or otherwise taken care of in the past will still remain on a credit report.

December gifts turn into January debt

Tennessee residents who went into debt this holiday season were not alone. According to the National Retail Federation, Americans spent an average of over $1,000 each to buy gifts for their friends and family this year. That amount of money isn't in most people's bank accounts. Studies claim that 60% of Americans have less than $1,000 saved in the bank.

Without enough money available in savings, many Americans turn to credit cards and personal loans to purchase gifts in December. After credit card balances rise, there is often an increase in delinquencies over the next two months. Some Americans are able to pay off this debt when they receive their tax refund later on. However, that may not be a good solution for everyone.

Answer these questions before filing for business bankruptcy

Your business is bogged down by debt, you're unable to stay current with your obligations and your employees are beginning to worry about what the future will bring. While this isn't a situation you want to be in, it's something that many business owners have dealt with over the years.

Bankruptcy isn't the right solution for every business owner, but there are times when it's the best way to discharge or reorganize debt. 

Student loans often aren't discharged in bankruptcy

Americans owe a total of $1.59 trillion in student loan debt. However, many Tennessee residents and others who carry student loan balances won't be able to discharge them in bankruptcy. For some, it is because they don't qualify to file for Chapter 7 bankruptcy. Chapter 7 bankruptcy allows debtors to liquidate assets and use the money raised to pay creditors. To qualify for a liquidation bankruptcy, an individual will need to pass a means test.

Of course, this is the just the first step for those looking to discharge student loan debt. After qualifying for Chapter 7 protection, it is then necessary to show that an individual has made a good faith effort to repay a student loan debt. Individuals must also prove that making payments will constitute a hardship that will last for most or all of the loan repayment period.

What debtors can expect from debt collectors

It isn't uncommon for individuals in Tennessee and other states to carry credit card or other types of debt. If a debtor is unable to stay current on a balance, it may be sent to a collections company, and debt collection companies may use a variety of tactics in an effort to get the money that they are owed. However, there are limits to what a debt collector can say or do to recover a past due balance.

For instance, those who retain the services of an attorney may direct all calls or letters to their legal representatives. Debtors may also ask that debt collectors stop calling or otherwise contacting them. After such a request is made, a debt collection agency may respond only to acknowledge that it has been granted. It is also important to point out that putting an end to phone calls or letters may increase the chances of collection agency filing a lawsuit.

Use credit cards as a last resort for medical debt

Consumers in Tennessee may have more money to use for savings and purchases as across the United States, the median household income has risen by 30% in 10 years. While this is good news, Americans are dealing with medical costs that are growing faster than income. Since 2009, medical costs have gone up by 33%.

Many people have been forced to put medical bills on their credit card after a health scare or visit to the hospital. Unfortunately, they are dealing with punishing interest rates. There are a few strategies individuals can use to avoid putting medical bills on their credit cards.

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Nashville Office
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Nashville, TN 37219

Phone: 615-686-2279
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Cookeville, TN 38501

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