Tennessee Debt Relief

Life in Tennessee is beautiful and people are blessed with astonishing scenery. But life can also be hard, especially in the current financial situation where prices are increasing but wages are not following such increases. As a result, people often find themselves in several types of debts because unexpected events happen and they can’t pay for them. Medical expenses, car breakdowns, or an unemployment spell can seriously affect people’s income and push Tennessee residents into debt. Thankfully, there are several Tennessee debt relief programs, including debt management, debt counseling, debt settlement, and debt consolidation loan solutions.

Let’s see what the types of debt relief options are in Tennessee and how you can find the right solution to your credit card debt problem.

Debt Management

Debt management programs help people find debt relief through a coordinated plan developed in collaboration with a credit counseling agency. It’s particularly helpful for individuals with multiple high-interest debts who are struggling to make minimum payments or manage their finances effectively. 

Through the debt management program, a professional counselor will help you review your financial situation, including income, expenses, and outstanding debts. This assessment gives the full scope of your fees and interest obligations.

Based on your financial assessment, the professional counselors will create a personalized debt management plan. This plan consolidates your unsecured debts into a single monthly payment which is easier to manage.

The credit counseling agency will negotiate with your creditors to lower interest rates, waive late fees, and ideally lower monthly payments. The goal of the specific relief program is to make your debt more manageable and help the card debt repayment process.

Debt Counseling

Debt counseling, also known as credit counseling, is a service provided by certified credit counselors in the state of Tennessee to help individuals find debt relief solutions, create a budget, and develop a plan for financial stability. Credit counselors will discuss your financial situation, including income, expenses, debts, debt solutions, and financial goals.

The counselor will help you create a realistic budget that balances your income and expenses, so you can meet your debt obligations while covering essential living costs.

Part of debt counseling is financial education. Credit counselors provide valuable education on financial management, including tips on saving, spending wisely, and avoiding future debt problems. This education helps you build long-term financial health.

Debt Consolidation Loans

A debt consolidation loan is a process that rolls your multiple, high-interest payments into a single, lower-interest monthly payment.

Debt consolidation might be advantageous for Tennessean people with a good credit score, as they can often secure a loan with a lower interest rate. This debt relief program makes the monthly payments more easy to handle and can also reduce the total amount of interest paid over the life of the loan.

Understanding Debt Settlement

Sometimes, debt management and counseling are not enough for people in Tennessee to handle their debt. If your income simply can’t cover the amount of debt you owe, then you should look for debt settlement. The goal is to reduce how much you owe to an amount that is realistic for your financial situation.

Debt settlement companies negotiate with creditors to reduce the total amount of debt owed. Once settlement has been agreed, you pay a lump sum that is usually 25 to 50% less than the original debt. Debt settlement is the best solution for individuals in Tennessee who face financial hardship and are unable to pay their debts in full but can manage a reduced amount.

Debt settlement can be a viable option in cases of unsecured debt, such as credit card balances, student loan balances, medical bills, and personal loans.

The Debt Settlement Process in Tennessee

Choose a debt settlement company

Many Tennesseans work with a debt settlement company to facilitate negotiations with creditors. Check for accreditation by organizations such as the Better Business Bureau (BBB), the American Fair Credit Council (AFCC), or the International Association of Professional Debt Arbitrators (IAPDA).

Assessing financial situation

The first step towards credit card debt relief is to assess your financial situation. This includes listing all outstanding debts, writing down your income and expenses, and determining how much you can realistically offer as a lump sum payment.

Negotiation

The debt settlement company will negotiate with your creditors on your behalf. They will aim to reduce the cost of the overall debt amount, often citing your financial hardship as a reason for the creditors to accept and charge a lower payment.

During negotiations — which can take a while — you stop making payments towards your debt and you are putting money into a savings account. This money, once it’s accrued, will be used to pay the settlement amount as agreed with your creditors.

Debt settlement agreement

If the creditors agree to the settlement, you will receive a settlement agreement outlining the new terms. You should carefully review this agreement to verify you understand the new payment amount and any conditions attached.

Make the payment

Once you accept the settlement terms, you will make the agreed-upon settlement payment to the creditor or through the settlement company. After this payment, the debt is resolved, though it may be reported on your credit report as "settled" rather than "paid in full."

The main advantage of debt settlement is a significant reduction in the total debt amount. That’s financial relief.

Debt settlement offers a viable alternative to bankruptcy, which can have more long-term effects on your credit and financial health.

A settled credit card debt provides a sense of closure and allows you to focus on rebuilding your financial stability.

Debt settlement negatively impacts your credit rating somewhat — but less severely than bankruptcy. Also, if you already had unpaid debts, your credit score was already bruised. Putting an end to a cycle of debt can help you recover your financial future.

Remember that the forgiven debt amount may be considered taxable income by the IRS. Once your debt is settled, you should consult a tax professional to understand the potential tax consequences.

Debt Settlement in Tennessee

Debt settlement can be a helpful tool for Tennesseans struggling with overwhelming debt as it’s a solid way to financial recovery.

If you feel swamped by debt, contact ClearOne at 866-481-1597 today. Our Certified Debt Specialists will find the best financial solution for you after discussing all the available resources for successful and viable debt relief. Get a free quote today!