The financial crisis has not ended for everyone across the country. Many Tennessee residents are still struggling to pay their bills and meet all their financial obligations. Unexpected expenses can create huge problems even for consumers that have jobs and a steady income. Medical debt in particular can be devastating.

This can be seen by the rate of bankruptcies that are filed in the state. During the first quarter of 2014, the amount of bankruptcies filed in the U.S. Bankruptcy Court for the Western District of Tennessee was comparable to the amount filed in the first quarter of 2013.

Of the bankruptcies filed, Chapter 13 bankruptcies were the most common. 2,253 Chapter 13 bankruptcies were filed in this district over the first quarter.

Unlike in a Chapter 7 bankruptcy, assets are not liquidated in a Chapter 13 bankruptcy. Instead, people who file a Chapter 13 bankruptcy create a court-approved repayment plan. Under this plan, people get to keep their personal property but pay down consumer debts over a three or five year period. If people stick with the plan, then any remaining debt is discharged when the plan is complete. During the repayment plan, people are free from creditor harassment and other credit collection measures.

Chapter 13 bankruptcy can be a good option for people who need debt relief but may not qualify for a Chapter 7 bankruptcy, or have valuable property they would like to keep.

Medical debt, job loss, divorce and other unexpected financial crises can create a hardship for Tennessee families. By understanding all their bankruptcy options, people can get out from the burden of this debt and receive a fresh financial start.

Source: The Daily News, “First-Quarter Bankruptcies Remain Flat,” Bill Dries, April 18, 2014