What is the difference between debt negotiation and debt settlement?

Debt negotiation and debt settlement are two separate ways of dealing with debt under Tennessee law. Debt negotiation is the process of negotiating with creditors to reduce the amount of debt that is owed. This can include negotiation of reduced interest rates, lower payments, and longer repayment terms. In contrast, debt settlement is a more drastic way to reduce debt. In debt settlement, a debt settlement company works with the creditor to settle the debt for an amount less than the original amount owed. This can be a viable option for those who are deep in debt and unable to make the required payments on their debt. Debt negotiation is typically done by individuals and does not involve a third-party negotiator. This approach does not always guarantee a successful outcome as creditors may not be willing to negotiate. Also, there can be risks associated with negotiating with creditors as they may try to take advantage of the consumer. In contrast, debt settlement is done through a third-party negotiator. It is typically used when an individual is unable to pay the amount owed and does not have the ability to pay it off in a reasonable amount of time. The negotiator will work with the creditor to come to an agreement on the amount that will be paid to settle the debt. This can be an effective way to reduce the amount of debt owed, but it can also have a negative impact on an individual’s credit score.

Related FAQs

Can I negotiate a reduced settlement amount?
What fees will I pay if I use a debt settlement company?
What happens to the debt that’s been settled?
How do I make sure I receive a fair settlement from my creditors?
What is the difference between debt negotiation and debt settlement?
What are the risks of choosing to settle a debt?
How do I know if a debt settlement company is reputable?
What is a “hardship program” and how can it help with debt settlement?
What is a debt settlement plan and how does it work?
What is the difference between debt settlement and debt management?

What is the difference between debt negotiation and debt settlement?

Related FAQs

Related Blog Posts