Tennessee Debt Collection Laws

The importance of the debt collection process, debt settlements, and debt related lawsuits is rising, along with the number of Americans in some form of debt. In 1978, The Fair Debt Collection Practices Act and the Fair Credit Reporting Act were passed by the federal government to deter creditors from unfair practices and outline all proper debt related practices. Additional laws are being passed in states around the country each year to further guide these processes.

Debt Collection in Tennessee

Tennessee sets many regulations to guide loaning practices, carrying misdemeanor penalties and undetermined fines. The standards for debtor's protection are held to the federal outlines. However, interest rates are unique in all states. Tennessee has a legal maximum interest rate of 10% and this rate is applied to judgment penalties. Usury is considered by the higher of either 24%, or 4% above the average prime rate. In order for any business or organization to grant loans and gain interest, they must attain a registration from the state government at a fee determined by a state appointed board.

Tennessee Statute of Limitations

The time allotted to an individual or organization to file suit against another party for any given charges is called a statute of limitations. In regards to debt law, these time limits begin after the first missed payment, rather than with the last completed payment. In addition, any changes in state residency do not affect a contract. Contracts hold the statute of limitation set at their place of creation. These limits in Tennessee are:

  • 6 years: Promissory notes
  • 6 years: Open accounts (credit cards)
  • 6 years: Oral agreements
  • 6 years: Written Contracts

Collections Practices and Rules for Tennessee

The federally created guidelines for collection practices imposed in Tennessee also incur their penalties of up to $1,000 per violation, and possible court costs. The federal percentages of wage garnishment are also stipulated by Tennessee law code at 75%. However, unique to Tennessee, debtors have the ability to file a "slow pay" motion, which will reduce the payment rate. Further reductions in this rate can be made at $2.50 per week for each child of the debtor. In addition, when creditors prevail in lawsuits, judges generally impose fees on the debtor to cover at least some of the post-judgment principal and interest.


  • Pre-judgment wage garnishment, if the debtor attempts to evade the court process
  • Collection of child support regardless of any outstanding debts or contracts
  • An increased interest rate (above 10%) for personal debts through a civil suit


  • Attempts to collect debt after a lawsuit judgment has been made
  • Collecting garnishment of federal, state or private financial support
  • Any and all verbal or physical threats of violence or a deceiving nature

Laws for Debt Harassment in Tennessee

The many laws that exist in Tennessee's law code relating to debt collection are generally suited to controlling the actions of collectors before and after lawsuits occur with debtors. The Fair Debt Collection Practices Act and the Fair Credit Reporting Act provide the guidelines for harassment judgments. They warrant the $1,000 penalties, but cannot compound in Tennessee, as stated in federal law.

Tennessee Debt Negotiation and Settlement Rules

Debt negotiations and settlement is simply the reformatting of a previously arranged contract to account for any changes of both parties, and are governed by all the same laws of initial contract negotiations in the given state. Usually they are desired by debtors who are struggling financially. Debt negotiations can provide payment deferrals, lump sum payments, and reduced or lessened continued payments. In addition, many debt settlement companies can quickly remove debt. However, these companies can engage in improper practices, sometimes causing debtors to pay out much more than their original debt in the end. Arranging fort these new plans is best done with the aid of a legal professional, and can result in several benefits.

  • Multiple debts can be consolidated
  • Anxiety of pending debts is reduced
  • The flexibility can be tailored to any specific financial outlook

Help from a Tennessee Debt Collection Attorney

The benefits of debt settlement can be irreplaceable for many, and the effect varies greatly in every situation. The success of one's renegotiated plan or settlement will nearly always be aided by the use of a debt settlement lawyer. Not only will they provide the knowledge and skills necessary to properly assess a debtor's circumstances and negotiate the proper arrangements, but also they will reduce the overall stress of the process. After a debt settlement is hired by a debtor, collectors must communicate through that lawyer, removing any hassle of attempted communication for the debtor. In addition, any actions of possible harassment by collectors will be dealt with effectively by these lawyers.

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