How to Settle a Debt in Tennessee: Your 3-Step Guide

Fallen behind on credit card payments? You’re not alone.

Creditors will call and send letters to get you back on track. But sometimes catching up isn’t possible. Maybe you lost your job or took on too much debt.

When you stop paying, your creditor may charge off your account. They’ll sell it to a collection agency. In some cases, they’ll file a debt lawsuit against you.

Even if you’ve been sued, you can still settle. You have options to resolve this debt and move forward.

Three Steps to Settle Your Debt in Tennessee

You can settle your debt for less than you owe. You can avoid going to court. Here’s how:

1. Respond to the lawsuit with an Answer
2. Make a settlement offer to start negotiations
3. Get your settlement agreement in writing

Each step matters. Skip one, and you risk losing everything.

Step 1: Respond to the Debt Lawsuit with an Answer

The lawsuit starts when someone files a Complaint against you. The Complaint lists why they’re suing you. It shows the amount you owe, including interest and fees.

Many people ignore lawsuits. That’s a mistake.

In Tennessee, you have 30 days to respond. Miss that deadline, and you lose automatically. The court grants a default judgment against you.

With a default judgment, collectors can garnish your wages. They can freeze your bank account. They can seize your property.

You must file an Answer. Even if you plan to settle, file an Answer first.

Your Answer is your defense. You might argue the debt isn’t properly validated. You might say you don’t have a business relationship with the creditor. Our partner Solo can help you identify the right defense.

Filing an Answer protects you. It gives you time to negotiate.

Step 2: Make an Offer to Start Negotiations

Next, figure out what you can afford to pay. Review your finances carefully.

Look at your savings. Check your upcoming paychecks. Consider selling items you don’t need. Ask family or friends for help if necessary.

Use this equation to find your settlement amount:

Amount available to settle = (monthly income – monthly costs) + savings

Start with an offer of at least 60% of the total debt. That’s enough to get your creditor’s attention. They’ll consider whether accepting your lump sum beats chasing you through court.

Can’t afford 60%? Try offering less. Explain your situation honestly.

Your creditor may counter your offer. Stay firm. Don’t accept terms you can’t meet. If you agree and then can’t pay, the creditor will resume legal action.

Our partner Solo handles settlement negotiations for you. The software does the back-and-forth work.

Step 3: Get Your Settlement Agreement in Writing

You reached a deal. Congratulations. Now get it in writing.

A written agreement protects both parties. It defines the terms clearly. It ensures everyone understands the deal.

Your written agreement should include:

• The exact amount you’ll pay
• The payment due date
• Where you’ll send the payment
• A release from further claims on this debt
• A requirement to drop the lawsuit
• Instructions to report the debt as settled to credit bureaus

Ask the creditor to sign and notarize the agreement. Notarization adds legal credibility.

Don’t send money without a signed agreement. Protect yourself first.

Real-World Example

Rudy fell months behind on his credit card. His creditor charged off his account and transferred it to LVNV Funding.

LVNV Funding sued Rudy for $5,000. Rudy responded with an Answer before Tennessee’s 30-day deadline. He listed his affirmative defenses.

This gave Rudy time to work out a settlement. He reviewed his finances and offered 60% of the debt: $3,000.

LVNV Funding accepted his offer. Both parties signed and notarized a settlement agreement. Rudy transferred the money.

LVNV Funding dropped its case. They reported Rudy’s debt as settled to credit bureaus.

Tennessee Debt Collection Laws You Should Know

Tennessee follows the Fair Debt Collection Practices Act (FDCPA). The law limits what creditors and collectors can do.

Under the FDCPA, creditors cannot:

• Call before 8 a.m. or after 9 p.m.
• Contact you more than seven times per week
• Call you repeatedly throughout the day
• Contact you at work if you ask them not to
• Threaten you with jail time for unpaid debt
• Pretend to be law enforcement or someone else

Tennessee’s statute of limitations gives creditors six years to sue. After six years, they can’t take you to court. They can still call and report to credit bureaus, though.

New Federal Rules on Debt Settlement

The Federal Trade Commission updated the Telemarketing Sales Rule. The new rules apply to all debt relief companies.

Debt settlement companies cannot:

• Charge upfront fees before settling your debt
• Hide information about their services, costs, or timeline
• Make false claims about their services

These protections help you avoid scams. They ensure transparency in the debt settlement industry.

Choosing a Debt Settlement Partner

Several companies can help you settle debt. Here are your best options.

Solo for Debt Lawsuits

Our partner Solo is ideal if you’re facing a current lawsuit. Solo handles settlement negotiations before your court date.

Solo negotiates on your behalf. Once you agree to terms, they ensure you get a written contract. They manage the payment process too. You won’t hand over banking information directly to collectors.

Solo is different from traditional debt settlement companies:

• Solo helps with debts of any size, not just debts over $15,000
• Solo actively pursues settlement instead of waiting for offers
• Solo is a trusted, legitimate company, not a scam
• Solo includes legal defense tools to block lawsuits while settling

Other Debt Settlement Options

Accredited Debt Relief works with clients who have at least $10,000 in unsecured debt. Programs last up to four years. Fees range from 15% to 25% of total enrolled debt.

Freedom Debt Relief has operated since 2002. They offer customized payment plans after a free consultation. Fees range from 15% to 25% of your total debt.

National Debt Relief requires at least $10,000 in unsecured debt. Programs last two to four years. You’ll pay 15% to 25% in service fees.

Best Ways to Contact Your Creditor

You can reach creditors by phone, email, or letter.

Email works best. You get a written record of all conversations. Most people negotiate settlements within one or two business days via email.

If you prefer phone negotiations, record the call. Tennessee law allows you to record without the other party’s consent.

Avoid snail mail. Your creditor might not respond quickly. You’ll waste precious time before your court date.

Understanding Tennessee’s Debt Collection Timeline

The statute of limitations for most debts is six years. After six years, creditors cannot sue you in court.

But they can still contact you. They can still report negative information to credit bureaus. The debt doesn’t disappear. It just becomes legally unenforceable in court.

Don’t ignore old debts. They still affect your credit. They still cause stress. Settlement can resolve these issues permanently.

Can You Settle Debt on Your Own?

Yes, you can handle debt settlement yourself. But you need to prepare.

Learn the process before contacting your creditor. Know what you can afford. Don’t accept offers you can’t fulfill.

Having help makes the process easier. Our partner Solo guides you through negotiations. You get professional support without high fees.

Your Path Forward

A debt lawsuit feels overwhelming. But you have power here.

You can settle before your court date. File your Answer first to protect yourself. Then determine what you can afford to pay. Negotiate with your creditor. Get everything in writing before sending money.

You don’t have to face this alone. Help is available.