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

A deemed satisfaction is a legal concept that applies to debt settlement in Tennessee. This is when a debtor and creditor agree to settle a debt for less than the total amount that is owed. This is known as a “debt settlement.” Deemed satisfaction occurs when the debtor pays the agreed-upon amount and the creditor signs a document stating they have accepted the agreed-upon amount as full payment. In Tennessee, a deemed satisfaction is valid once the agreed-upon amount is paid. It prevents the creditor from pursuing any other collection action against the debtor, such as filing a lawsuit or continuing collection attempts. In other words, a deemed satisfaction relieves the debtor of any further obligations to the creditor. Debtors should be aware that a deemed satisfaction could still have a negative impact on their credit score, even if it avoids a lawsuit or more aggressive collection action. This is because creditors can report the debt settlement to the credit bureaus, which can appear as a negative item on the debtor’s credit report. Debtors should also be aware that a deemed satisfaction doesn’t completely eliminate the debt. Although the creditor cannot pursue any further collection action against the debtor, the debt may still be subject to state or federal tax laws. As such, a debt settlement should be considered carefully, as it could still affect a debtor’s finances in the long-term.

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

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