What happens to the debt that’s been settled?

In Tennessee, when a debt is settled, it is generally considered paid in full. This means that the creditor must agree to accept a lump sum payment that is less than the total amount owed and forgive the rest of the debt. The credit reporting agencies must be notified of the settlement and will report the debt as “settled” or “paid”, which can help improve a person’s credit rating. The creditor is also required to provide the debtor with a signed release letter outlining the terms of the settlement, which states that the creditor agrees to accept the lump sum payment in full satisfaction of the debt. The debtor can keep a copy of the letter as evidence that the debt is settled. The creditor may also report the amount of the debt that was settled. This is a favorable option for the debtor because it reflects the fact that the debt was settled for less than the full amount owed. In some cases, the amount of the debt can be shown as “zero” on the credit report. It is important to note that some creditors may refuse to settle a debt and will pursue collection activities. There are a number of reasons why a creditor may choose this option, including the fact that the debt is too old or that the creditor does not believe that the lump sum payment is enough to cover the full amount due.

Related FAQs

Can a creditor challenge a debt settlement?
Are there any costs associated with a successful debt settlement?
When is it best to pursue debt settlement?
How quickly can I expect to see results from a debt settlement?
Is there a minimum debt amount to qualify for debt settlement?
Do I have to pay taxes on debt settled through negotiations?
Are there any programs offering debt settlement help?
Are there any tax implications of debt settlement?
Can creditors refuse to negotiate a debt settlement?
How do I know if I have been approved for a debt settlement?

What happens to the debt that’s been settled?

Related FAQs

Related Blog Posts