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 debt settlement without the help of an attorney?
Are there any services that can help me with a debt settlement?
How long does it take to complete a debt settlement?
What is a “hardship program” and how can it help with debt settlement?
How do I protect my credit score during a debt settlement?
What is a lump-sum debt settlement and how does it work?
How can I ensure I don’t fall behind on payments during the settlement process?
How do I stop debt collection calls during the settlement process?
What are the potential consequences of a failed debt settlement?
What fees will I pay if I use a debt settlement company?

What is the difference between debt negotiation and debt settlement?

Related FAQs

Related Blog Posts