What is a lump-sum debt settlement and how does it work?

A lump-sum debt settlement is a method of debt relief wherein a debtor (the person who owes money) agrees to pay off their debt in one sum rather than a series of payments. In Tennessee, a lump-sum debt settlement typically requires the debtor to pay the creditor (the person they owe money to) a reduced amount of the original debt. The creditor is then obligated to accept the lump sum as payment in full. In a lump-sum debt settlement, the debtor is typically required to offer the creditor an amount of money that is less than the total amount of the original debt. In Tennessee, creditors must accept this offer if they agree to the terms of the settlement. The debtor then has the obligation to make a single payment to the creditor, which covers the amount that has been negotiated and agreed upon. This payment is typically made in a manner that is mutually agreed upon by both the debtor and creditor, such as a cash payment or an electronically transferred check. Once the lump-sum payment has been made, the debt is considered as paid in full and the creditor must no longer attempt to collect any further funds from the debtor. Additionally, any interest or fees that may have been applied to the debt is also considered as paid in full. Overall, a lump-sum debt settlement is a method of debt relief that allows debtors to pay off their debt in one sum, as opposed to a series of payments. This can be beneficial to debtors, as it allows them to take control of their financial situation and become debt-free more quickly.

Related FAQs

Can a creditor challenge a debt settlement?
How do I find out the balance of my debt?
What fees will I pay if I use a debt settlement company?
Who should I contact to settle my debt?
When can I start making payments on my debt settlement?
Are there any legal risks associated with debt settlement?
How do I know if debt settlement is right for me?
What are my rights and options when it comes to settling debt?
How can I make a debt settlement offer more attractive to creditors?
Is it possible to settle a debt for less than the amount owed?

What is a lump-sum debt settlement and how does it work?

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