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How to Get Debt Relief in Tennessee

Dena Standley | October 19, 2022

Dena Standley
Legal Expert, Paralegal
Dena Standley, BA

Dena Standley is a seasoned paralegal with more than 20 years of experience in legal research and writing, having received a certification as a Legal Assistant/Paralegal from Southern Technical College.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

SoloSuit is on its way to rescue you from debt

Summary: If you're struggling with debt in Tennessee, SoloSuit can help you find the relief you need.

Debt can rob you of your peace of mind. The overwhelming monthly payments or the persistent calls from creditors can prevent you from finding solace even in a nature-abundant state like Tennessee.

According to a World Population Review, Tennessee has the 5th lowest debt in the country, with a debt ratio of 17.3%, meaning that Tennessee has relatively more assets than debt. Hence, Tennessee has resources that can help you get out of debt or assist you indirectly by providing necessities for free or at subsidized rates.

Debt-relief programs are a lifeboat that has saved many Tennesseans from drowning in debt. But before choosing an option, take time to research the company you want to work with to avoid being scammed. In addition, consider the effects the chosen option will have on your financial situation and credit score.

Here's how debt consolidation works in Tennessee

Debt consolidation in Tennessee is not different from other states. It is a debt management option that combines all debt into a single debt with a lower interest rate. Depending on the method you choose and your financial situation, you can pay the money back over a longer or shorter period. You can consolidate the debt independently or work with a reputable debt consolidation company.

If you decide to do it yourself, you should take out a loan with a zero to a maximum of 7% interest rate and immediately pay all your pending unsecured debt. Afterward, you‘ll remain with one debt to pay monthly and at a slightly lowered amount.

Let's consider an example.

Sandy has three pending loans: a medical bill of $1500, a credit card debt of $2030, and a store card balance of $870. Each of these debts have an interest rate between 11–13%. She decides to consolidate the debts by getting a personal loan of $4400 with an interest rate of 4.5%. She pays off the three debts and remains with the personal loan—which she determines to clear in 3 years.

Consolidation is not a viable option for all Tennesseans with debt. You can qualify for debt consolidation only if you have a consistent monthly income, a reasonable debt-to-income ratio, and a fairly good credit score. The table below gives you a breakdown of the credit scores.

Credit Score Breakdown

Credit score rating

Actual credit score

Bad

300-549

Poor

550-619

Fair

620-679

Good

680-739

Excellent

740-850


Sometimes, it is better to work with a debt consolidation company if you lack the financial expertise or you have tried to manage it yourself and failed. The debt consolidation company will work with you as follows:

  • They will assess your financial position and debt situation.
  • They will request you to sign up with their program.
  • You will open a savings account where you'll make a single payment each month, and the company distributes the money to the creditors.
  • The company will contact the creditors and inform them that they will be handling the debt and direct all communications to them.
  • They will negotiate for a lower interest rate or elimination of late fees.
  • You will discuss the monthly payments after applying the new rates and continue with the payments until you clear the debt.

Whichever method you use, the goal is to help you make a single monthly payment at a possibly reduced rate. This strategy will remove the burden of distributing payments over several creditors and save you some money.

Debt settlement can affect your credit score

Debt settlement is a debt relief option that allows you to clear your debt in full by negotiating with your creditors for a reduced payment. You can contact the creditors directly or work with a debt settlement company. Several factors determine how severe debt settlement affects your credit score, including:

  • Your current credit situation.
  • Reporting tendencies of your creditors.
  • The size of debt being settled.
  • Condition of your other debts.
  • How much was reduced from the original debt.

Once you make the payments, it is recorded as 'paid-settled' on your credit report. A paid-settled status is better than having a severely delinquent debt record, although it affects your credit score. The reason being you did not pay the debt as per the originally agreed terms.

Other lenders may take notice of the settlement and shy away from granting you credit. This is a risk that some Tennesseans consider worth taking because it relieves them from debt and gives them a fresh start.

Creditors are usually unwilling to settle debts that are up-to-date and paid promptly. It is easier to settle debts that have passed their due date and have already been turned over to a debt collection agency. Some debt settlement companies will advise you to stop making payments for several months to prompt the creditors to accept a settlement.

Keep in mind that you will pay a fee to the debt settlement company for their services. Even after the fee, there's a great chance you will still save money, depending on the settlement reached.

Should bankruptcy be your last option?

It depends.

Bankruptcy often seems like a magical solution because it promises to get rid of most debt. It is a debt-relief option that works for Tennesseeans with little to no money to make debt settlement payments.

The sense of debt relief comes at a high cost because your credit report will have a bankruptcy entry for 7–10 years, and your credit score will be severely affected. Other effects of bankruptcy are:

  • You will have a high-risk borrower status, and you may fail to get loan approvals.
  • You will receive extremely high-interest rates because of a poor credit score.
  • You may find it hard to get a new job or a decent promotion if your employer pulls your credit report.

Bankruptcy is often considered a last option for most consumers. Before choosing this option, contact a non-profit credit counseling organization in the following approved list from the Department of Justice.

Consider these Tennessee debt relief programs

As a resident of Tennessee, you are entitled to state and federal programs that can help people who have fallen on hard financial times. Check out these Tennessee debt relief programs to see if you qualify:

  • Families First: Tennessee's version of TANF, this program helps participants become self-sufficient by providing temporary cash assistance, transportation, child care assistance, educational supports, job training, employment activities, and other support services.
  • Child Care Services: Plans, implements, and coordinates activities and programs to ensure quality and the health and safety of children in licensed care.
  • Social Services Block Grant: Provides funding for the Adult Homemaker Services and the Adult Day Care services to low-income elderly or disabled adults.
  • Supplemental Nutrition Assistance Program (SNAP): Provides food assistance to Tennessee residents in need.
  • Private Student Loan Relief: Provides a network of financial counselors who link troubled families with trustworthy agencies for financial assistance with private student loans.

What if I've been sued for debt in Tennessee?

Debt collectors and creditors can give you sleepless nights with their constant calls or emails demanding their money. If they're coming after you for a debt you owe, they might even take you to court. If that's the case, the first step to winning a debt lawsuit is to respond to it.

You can use SoloSuit's free Answer form to respond to the Summons for debt collection and win in court. To learn more about how to respond to a debt lawsuit in Tennessee, check out this video:

What is SoloSuit?

SoloSuit makes it easy to fight debt collectors.

You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.

SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

Respond with SoloSuit

"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James

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