What is a deemed satisfaction and how does that apply to debt settlement?

A deemed satisfaction is a legal status that is applied when a creditor admits that a debt it is owed has been settled. This may occur when a creditor decides to accept a reduced repayment amount instead of demanding the full amount. In Delaware, when a debt settlement is reached between a creditor and debtor, the creditor must agree to a “deemed satisfaction.” Once the creditor has agreed to a debt settlement, the court may approve the agreement. This agreement is then treated as “deemed satisfaction”. This means that the creditor has accepted the reduced repayment amount as full and final payment of the debt. The creditor cannot later try to collect more money from the debtor. Additionally, the debtor will no longer have to pay the remaining balance of the debt. In some cases, the debtor may even receive a tax deduction on the forgiven amount. In Delaware, it is important to note that the law governing debt settlement does not grant a “discharge” of the debt. This means that the amount owed will still appear on the debtor’s credit report. This can have a negative impact on the debtor’s credit score. Thus, when it comes to debt settlement in Delaware, deemed satisfaction is an important concept. It is the legal status given to debt settlements in which the creditor agrees to accept a reduced repayment amount from the debtor. This has the effect of reducing or eliminating the remaining balance of the debt.

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What is a deemed satisfaction and how does that apply to debt settlement?

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