Tennessee law considers medical debt an unsecured debt similar to a credit-card bill. Creditors in the state must follow federal regulations with regard to collecting an unpaid medical bill, including refraining from intimidating or harassing tactics. State law has created programs to help those with low income pay off medical debts, but many are left out due to the restrictive eligibility requirements.
Debt Collection Regulations
The state of Tennessee considers medical debt as a written contract for debt-collection purposes. A patient enters into a contract with a hospital to provide medical services in exchange for a fee. According to debt-information wesbite BCS Alliance, the statute of limitations for collection on an unpaid medical bill in Tennessee is six years. A creditor has this amount of time to sue the debtor in civil court to force repayment. Once the statutory time expires, the debtor gains a legitimate defense in court against the creditor's debt-collection attempts.
Negotiating with Hospitals
Tennessee law places no restrictions on a debtor's ability to negotiate a medical debt with a hospital or doctor. This can allow the debtor to lower the total amount she owes and make paying back the debt more realistic. A hospital or doctor may be receptive to a negotiated settlement because Tennessee and other states around the country consider medical debt unsecured, meaning the creditor has no property to seize to compel the debtor to pay.
Wage garnishment is legal in Tennessee. The state uses federal regulations for garnishment, allowing a creditor to seize the lesser of up to 25 percent of a debtor's disposable weekly income or up to 30 times the federal minimum wage in disposable weekly earnings. The law considers any money left over after paying required state and federal taxes as disposable. A hospital or doctor in Tennessee or another state may find it difficult to secure a judgment for garnishment for an unpaid medical bill because of the unsecured nature of the debt. A creditor may alternatively pursue a lien against the debtor's property. This court action entitles the creditor to a share of the profits from the sale of the attached property.
Limited State Help
The state of Tennessee has enacted several programs to help consumers reduce outstanding medical debt, but these programs have received relatively little funding and have restrictive eligibility requirements. According to Knoxnews, as of February 2011, the TennCare's "Standard Spend Down" program helps those with large unpaid medical bills who are at least 65 years old or legally disabled with low income. Even with these restrictions, only 2,500 applicants received help on a first-come, first-served basis.