Editor's choice: National Debt Relief
- No cancellation fees
- Low minimum to enroll
- No upfront fees
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Tennessee strictly controls what services and fees debt relief companies can charge. By checking that your provider is licensed, you can avoid scams and ensure you work with a legit debt relief service.
Our table is a good starting point to compare providers, but confirm that the company is licensed in Tennessee before you sign up.
The Uniform Debt Management Services Act regulates both debt management and debt settlement services in Tennessee. All debt management providers are required to obtain licenses and maintain toll-free communication systems with a certified counselor, certified debt specialist or customer service representative.
A debt management company can charge a flat fee of $50 for consultation and account setup. It can also charge a monthly service fee of $10 per creditor — no more than $50 total — if the provider will negotiate finance charges, late fees and fees for default on your behalf.
If you decide the company's counseling or educational services aren't for you, you can receive a refund. It must be within 90 days of finishing or terminating the program.
Providers must disclose all fees as well as the schedule of payments to be made. This includes the amount of each payment, the due date and an estimated final due date. Your provider must also disclose when payments to each creditor will be made. If your provider believes a creditor won't be willing to settle your debts, it can't be included on your plan.
Your provider must maintain a trust account in your name. This is owned by you but managed by your provider, and if you cancel or terminate your agreement, the funds in it will revert to you.
You are able to cancel your agreement with a provider before midnight on the third business day after you sign the agreement. Debt relief providers must offer you a refund and cannot penalize you for cancellation.
You can also end your agreement at any time through a written or electronic notice. If you choose this route, your provider must refund you the money that hasn't been earmarked for creditors or fees.
If you cancel with a debt settlement company, it must refund 65% of the setup fee you were charged. Although it doesn't need to refund settlement fees for accounts that have already been approved.
There are a few options you can utilize when looking for debt relief in Tennessee.
All debt relief companies must be registered to work in Tennessee. Request the licensing number of any provider you want to work with and confirm that it's registered. You can also browse a list of companies and individuals banned from offering debt relief.
Debt relief companies can't charge any upfront fees. If one does, it's likely a scam. Also be on the lookout for lack of industry accreditation, poor customer reviews and lawsuits against the company. All of these can be signs of a scam — or a provider you don't want to work with.
Tennesseans had an average debt-to-income (DTI) ratio of 1.33 to 1.41 in the first quarter of 2020, according to a study published by the Federal Reserve. A DTI lower than 1 is ideal — but Tennessee certainly isn't the worst out there.
The average consumer debt for Americans was $90,460 in 2018, according to data from Experian. In 2019, the consumer debt for Tennesseans looked like this:
Other consumer debt, like personal loans and car loans, weren't broken down by state.
Tennessee has a wide range of protections and regulations under the Uniform Debt Management Services Act. This gives you an edge when finding legit companies to work with. Start by reading our guide to debt relief so you can learn important aspects of becoming debt free.
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