How to Settle a Debt in Tennessee

Edited by Hannah Locklear

If you’ve recently fallen behind on payments to a creditor, you’ve likely received lots of calls and letters. Creditors will try to get you back on track with your payment schedule.

However, sometimes you can’t afford to catch up with your payments. You may have lost your job or taken on too much debt. If you don’t resume your payments, your creditor will likely charge off your account and sell it to a collection agency. In some cases, the creditor or debt collector will even start a debt lawsuit.

Even if you’ve been sued for a debt you owe, it isn’t too late to settle the matter. SoloSettle makes debt settlement simple with a tech-based approach. Keep reading to learn more.

There are 3 basic steps to debt settlement

If you’ve been sued for debt in Tennessee, you can settle the debt for less than the original amount and avoid going to court. There are three steps in the debt settlement process:

1. Respond to the debt lawsuit with an Answer.
2. Make an offer to start negotiations.
3. Get your settlement agreement in writing.

Keep reading to explore each of these steps in detail. Otherwise, check out the following video to learn more about how to settle a debt in Tennessee:

1. Respond to the debt lawsuit with an Answer

A lawsuit begins when a creditor or collector files a Complaint against you in your local Tennessee court. A Complaint lists the reasons for suing you, including your lack of payments toward the debt. The Complaint will indicate the amount you owe, including any interest, court costs, and other penalties.

Many people don’t realize they must file a response to the Complaint. In Tennessee, you have 30 days to respond to a debt lawsuit. If you don’t respond before the deadline, you will lose by default. This happens when the opposing party requests a default judgment against you, and the court grants it.

With a default judgment, creditors and debt collectors have the right to garnish your wages, seize your property, and freeze your bank account. This is why it’s critical that you answer the lawsuit as soon as possible.

The formal response document, known as an Answer, is your defense to the lawsuit. Even if you know you owe the debt and plan to settle, you should still file an Answer.

There are multiple defenses available for debt lawsuits, but a few of the most common include insufficient validation of the debt or lack of business relationship with the creditor. If neither of those defenses is appropriate, you can find another that is.

Make the right defense the right way with SoloSuit.

2. Make an offer to start negotiations

Next, you’ll want to determine how much you can afford to pay off to settle the debt. Assess your finances, including your savings and upcoming paychecks. If you don’t have much money available, consider selling something you don’t need or seeking help from family and friends. You can use the following equation to help you determine a settlement amount:

Amount available to settle = (monthly income – monthly costs) + savings

Ideally, you’ll want to start with an offer of at least 60% of the total value of your debt. That’s enough for your creditor to seriously consider whether it makes more sense to accept your lump-sum payment than to pursue further collection activities against you that may have uncertain results. If you can’t afford 60%, you can always try to settle for less. You might even consider asking friends or family for a loan to help with the payment.

Once you contact your creditor to start the negotiation process, they may counter your offer with one of their own. Stay the course, and don’t accept an offer you know you can’t follow through with. If you do and cannot adhere to the terms of the agreement, the creditor will resume their legal process against you.

SoloSettle’s software takes care of the settlement negotiations.

3. Get your settlement agreement in writing

When you have a deal with your creditor, it’s essential to put it in writing. A written agreement defines the terms of the contract and ensures everyone is on the same page.

Your written agreement should clearly indicate the amount you’ll pay to your creditor. It should also stipulate when the payment is due and where you’ll send it.

The agreement should expressly release you from further claims concerning the obligation and require that your creditor drop the lawsuit against you. It should also instruct the creditor to report the debt as settled to the credit reporting bureaus.

SoloSettle helps you manage the settlement agreement documentation.

We recommend that you ask the creditor to sign and notarize the agreement. Notarizing the agreement adds an additional layer of legal credibility.

Here’s a debt settlement agreement example, so you know what to look for in yours.

Take a look at a hypothetical example of how to settle a debt in Tennessee using these three steps.

What are Tennessee’s debt collection and debt settlement laws?

Tennessee follows the Fair Debt Collection Practices Act (FDCPA), which limits the activities creditors and debt collectors can take against a consumer. Under the FDCPA, creditors cannot take the following actions:

• Call a consumer at untimely hours, like before 8 a.m. or after 9 p.m.
• Contact a debtor more than seven times per week.
• Repeatedly call a consumer throughout the day.
• Contact the consumer at work if they expressly ask the creditor not to.
• Tell the consumer they’ll go to jail if they don’t repay a debt.
• Pretend to be someone else, like a law enforcement agent, when communicating with a debtor.

Under the statute of limitations established in TN Code § 28-3-109 (2019), creditors have up to six years to pursue collections on written and oral contracts. Once that time passes, legal action against the debtor is time-barred.

On top of these laws, the Federal Trade Commission has recently amended the Telemarketing Sales Rule to expand debt settlement regulations to all debt relief organizations and companies. All 50 states, including Tennessee, are governed by this Rule as it relates to debt settlement practice.

Under the new Rule, any company that provides debt relief services, namely debt settlement companies, cannot:

• Charge upfront fees. Debt settlement companies cannot collect any fees from a consumer before the debt has been effectively settled or otherwise resolved.
• Fail to disclose certain information about its services before a consumer enrolls in the program. This includes how much the service costs, how long it takes to see results, how much money must be saved before a settlement offer is made, consequences that may occur if the consumer fails to make payments on time, customer’s rights, and other important terms.
• Misrepresent their services. No false or unsubstantiated claims can be made regarding a debt settlement company’s services.

What’s the best debt settlement company?

Various debt settlement companies can assist you with the debt settlement process. Here are a few of our recommendations.

SoloSettle

SoloSettle is the best solution for anyone facing a current debt lawsuit. Before your court date, SoloSettle handles the debt settlement negotiation process for you.

We’ll negotiate a settlement on your behalf. Once you agree to it, we’ll make sure you have a written contract. Then, we’ll deal with the payment process, so you won’t need to worry about handing over your banking information to a debt collector.

SoloSettle is different from other debt settlement companies for several reasons:

• SoloSettle can help you settle a debt of any size, whereas many debt settlement companies require you to have a debt over $15k.
• SoloSettle actively attempts to settle your debt, whereas many debt settlement companies take a more passive role, waiting for settlement offers to come to them.
• SoloSettle is offered by SoloSuit, a trusted brand and a legitimate company. Many traditional debt settlement companies are actual scams.
• SoloSettle has legal defense built in with SoloSuit. While settling, you can use SoloSuit to block lawsuits if you need. Most debt settlement companies don’t provide legal defense; if you’re sued for a debt you are on your own.

Accredited Debt Relief

Accredited Debt Relief is another debt settlement organization that’s assisted thousands of people through debt settlement. Qualified clients with multiple unsecured debts totaling at least $10,000 can enroll in a program that will last up to four years. Costs for Accredited Debt Relief’s services range from 15% to 25% of the total enrolled debt.

Freedom Debt Relief

Freedom Debt Relief is one of the oldest debt settlement organizations in the U.S. Since 2002, the company has helped thousands of debtors resolve their obligations. Interested applicants undergo a complimentary consultation and receive a customized payment plan. If they enroll in the program, they’ll make monthly payments toward resolving their debts. Fees range from 15% to 25% of the participant’s total debt.

National Debt Relief

National Debt Relief assists individuals with resolving multiple debts through debt settlement. To qualify for its programs, you must have at least $10,000 in unsecured debt, like credit card balances or medical bills. Programs last two to four years, and you’ll pay 15% to 25% of your debt in service fees.

What’s the best way to contact my creditor?

If you’d like to attempt debt settlement, you can contact your creditor via phone, email, or letter.

Email is usually the best way to reach a creditor. With email, you have a written record of the conversation. You’ll also get quick results; most people can negotiate a settlement within a business day or two.

We recommend recording the call if you prefer negotiating a debt settlement with your creditor over the phone. Under TN Code § 39-13-601, you can make a phone recording without the other party’s consent.

Snail mail is the least efficient way of negotiating debt settlement. Your creditor might not immediately respond to your letter, which can eat into your limited time before your court date.

FAQs about debt settlement in Tennessee

Most people have concerns about debt settlement in Tennessee. Here are answers to a few typical questions.

Q. How long is it before a debt becomes uncollectible in Tennessee?

The statute of limitations for oral and written contracts is six years. Most debts fall under this category. If your debt passes the six-year limit, your creditor cannot pursue you in court for nonpayment. However, they can still call you, send you emails, and negatively report your account to the credit reporting bureaus.

Q. What percentage of debt should I offer to settle?

The amount you offer in a settlement is a personal matter. You’ll want to evaluate your finances to determine what you can afford. The more you offer, the greater the likelihood your creditor will accept a settlement. However, if you can’t afford much, explain your situation to your creditor. They may take less if they understand your financial circumstances.

Q. Can I work on my own debt settlement?

Yes, it is possible to do your own debt settlement. However, you’ll want to learn about the process before reaching out to your creditor. Determine how much you can afford in a settlement, and don’t accept any offer from your creditor you can’t fulfill.

How to get debt relief in Tennessee

SoloSuit has a few other guides concerning debt relief and debt collections in Tennessee. We’ve listed them below.

• How to Get Debt Relief in Tennessee | SoloSuit Blog
• What Is a Non-Dischargeable Debt in Tennessee? | SoloSuit Blog
• Statute of Limitations on Debt in Tennessee | SoloSuit Blog
• How to Answer a Summons for Debt Collection in Tennessee (2021 Guide) | SoloSuit Blog
• Tennessee Court Case Search — Find Your Lawsuit | SoloSuit Blog

You can settle your debts in Tennessee

While a debt lawsuit may be frustrating, it is possible to settle the matter before your court date. File your Answer with your local Tennessee court and determine how much you can offer in a settlement. Once you have a deal with your creditor, get it in writing before sending your money.

If you need help with debts in Tennessee, check out SoloSuit’s solutions.

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.

>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit. (We can help you in all 50 states.)

How to answer a summons for debt collection in your state

Here's a list of guides for other states.

All 50 states.

• Alabama
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Guides on how to beat every debt collector

Being sued by a different debt collector? Were making guides on how to beat each one.

• Absolute Resolutions Investments LLC
• Accredited Collection Services
• Alliance One
• Amcol Clmbia
• American Recovery Service
• Asset Acceptance LLC
• Asset Recovery Solutions
• Associated Credit Services
• Autovest LLC
• Cach LLC
• Cavalry SPV I LLC
• Cerastes LLC
• Colinfobur
• Covington Credit
• Crown Asset Management
• CTC Debt Collector
• Cypress Financial Recoveries
• Delanor Kemper & Associates
• Eagle Loan of Ohio
• Educap
• Estate Information Services
• FIA Card Services
• Forster & Garbus
• Freshview Solutions
• Fulton Friedman & Gullace LLP
• Harvest Credit Management
• Howard Lee Schiff
• Hudson & Keyse LLC
• Integras Capital Recovery LLC
• Javitch Block
• Jefferson Capital Systems LLC
• LVNV Funding
• Mannbracken
• Mariner Finance
• Medicredit
• Michael J Adams PC
• Michael J Scott
• Midland Funding LLC
• Mullooly, Jeffrey, Rooney & Flynn
• Mountain Land Collections
• MRS Associates
• National Collegiate Trust
• Nationstar Foreclosure
• Northstar Capital Acquisition
• NCEP LLC
• NRC Collection Agency
• OneMain Financial
• Palisades Collection LLC
• Pallida LLC
• Paragon Revenue Group
• Pinnacle Collections Agency
• PMAB LLC
• Portfolio Recovery Associates
• Provest Law
• PYOD LLC
• Reunion Student Loan Finance Corporation
• Revenue Group
• Regents and Associates
• RSIEH
• Salander Enterprises LLC
• Second Round Sub LLC
• Security Credit Services
• Sherman Financial Group
• Suttell and Hammer
• T-Mobile
• Transworld Systems
• Tulsa Teachers Credit Union
• UCB Collection
• Velo Law Office
• Velocity Investments
• Waypoint Resource Group
• Weinberg and Associates
• Wolpoff & Abramson

Win against credit card companies

Is your credit card company suing you? Learn how you can beat each one.

• Bank of America
• Capital One
• Chase
• Credit One Bank
• PayPal Synchrony Card
• SYNCB/PPEXTR
• Synchrony Bank
• Target National Bank
• Wells Fargo

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How to Make a Debt Validation Letter - The Ultimate Guide

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