(The author of this article is not a lawyer,
nor should this article be substituted for legal advice by a
practicing attorney. This is for educational purposes only, and before
determining the legal remedies available for creditors, please rely only on
the advice of a licensed Texas attorney about your situation. For legal
advice, please contact a lawyer.)
Debt settlement is also known as debt negotiation or debt reduction, is a relatively
new way for dealing with your debt problems. In a debt settlement
program, by negotiating with a creditor, it is possible a client may
be able to settle their debts for less than the balances they owe
and as a result get out of debt much faster than just paying the
Debt settlement is a good solution for consumers feeling overwhelmed
with credit card debt that find themselves either falling behind on
their payments or just able to afford the minimums. Considering the
savings, in may be worth considering if you find yourself in any of
the aforementioned situations. As with any debt solution, however,
there are potential downsides to debt settlement that should always
be considered prior to enrollment. First, debt settlement may have
an adverse impact on your credit.
Two other drawbacks to consider before choosing debt settlement
include 1) the possibility of legal action being taken by the
creditor to collect the full balance and 2) the possibility of
creditors harassing you until the debt is settled.
Thankfully, if you're doing debt settlement in Texas or even
debt settlement in Florida these concerns may be lessened somewhat. Why is Texas debt
settlement so preferable compared to a lot of other states? The
reason is Texas has highly favorable debtor laws that give consumers
a lot of rights and protections when it comes to past due unsecured
accounts like medical bills, credit cards, repossessions, and
How State Collection Laws Benefit Texas Debt Settlement
Every state has falls under federal law that say if a collections
agency is collecting a debt, they are legally obligated to stop
contacting a consumer if the consumer sends a Cease and Desist
letter and/or a Power of Attorney notifying the collection agency
that a third party is responsible for handling all communications
with the creditor. Texas law takes it a step farther and not only
limits harassment from collection agencies, but also from the
original creditor as well. In most states, when a consumer falls
behind on their payments and the debt is still being collected by
the original creditor (the bank that originally lent you the money
or the hospital that serviced you, for example), then the creditor
is reserved the right to call the debtor on a daily basis in order
to collect whatever is owed, and as a result, most debt settlement
clients do in fact experience phone calls during the program,
particularly in the early stages when the accounts are being handled
by the original creditor as opposed to a collection agency.
Although there are legal protections from harassing phone calls
for Texas clients, they should expect calls in the program, however.
That said, the protections offered go above and beyond most states,
giving the client more rights and remedies for violations made.
Also, please note that since Franklin Debt Relief is not a law firm,
however, we cannot help you to exercise your rights under these
laws, although we can certainly help direct you to the resources
necessary for you get protection from creditor harassment such as
lawyers who specialize in helping in these types of situations.
Texas Debt Settlement and Texas Homestead and Garnishment Laws<
For Texas debt settlement clients, their wages and home are
completely protected, which gives the creditor even more incentive
to settle. Given the fact that creditors already have every
incentive to settle even with clients who reside in states with less
favorable debtor laws, Texas debt settlement clients are in
an even stronger negotiating position with their creditors. What
does this actually mean? Typically it means even greater protection
in the event of a lawsuit and greater savings than what is typical.
Let me explain.
Although most accounts will settle, some accounts do not, and
instead creditors opt to pursue legal action instead to collect the
full balance. After all, creditors are always reserved the right to
sue debtors to collect a past due account, regardless of whether the
consumer is taking any action to resolve the outstanding debt.
In the event a creditor sues a consumer in court and wins a
judgment, they'll usually go about executing the judgment in one of
the following ways:
1) Wage garnishment---contacting your employer and asking that they
set aside a percentage of your wages every paycheck until the debt
is paid back in full. (It's illegal for an employer to fire you for
this unless more than one creditor is garnishing your wages).
2) Lien on your property---obligates you to pay back the creditor
with any proceeds from the sale or refinancing of the property. A
creditor prefers to put a lien on your home since it usually
increases in value over time, which means the proceeds from your
home's sale will be higher, and thus they're more likely to actually
get paid back.
3) Seizing your bank account---contacting your bank, showing the
proof of judgment, and asking to withdraw any monies held in deposit
under your name.
Fortunately, Texas laws protect debtors from having their wages
garnished (unless you authorized in writing to allow your creditor
to garnish your wages) and entitle Texas consumers to 100 percent
homestead protection in the event of a lien. (Note: this does not
apply to tax liens, alimony, or contractor's liens or second
residences, rental properties, etc..) One downside, however, is that
bank accounts are not exempt under state law.
In sum, these are major advantages for Texas debt settlement
clients. When you consider Texas state laws, debt settlement makes
even more sense for the credit card companies, debt collection
agencies, and most importantly, for the consumer.
Please note that lawsuits are still possible even if you reside in
Texas and in the event you are sued, Franklin Debt Relief cannot
represent you because we are a law firm. The above is for
educational purposes only and FDR makes no guarantees about its
accuracy, although every effort has been made to make sure it’s not
erroneous. Please consult with an attorney for information about
Texas Debt Settlement and Community Property Laws
If you are married, reside in Texas, and are seeking debt settlement
services, you should enroll any and all debts that were accumulated
during the marriage by both you and your spouse. Just because
the debt is owned by only one partner the other partner is not
exempt from having to pay for it as well under Texas law. Creditors
know this and may use it to their advantage in the collections
process. In other words, they can potentially not only hold you
liable for any debts you incurred during your marriage, but also you
spouse, even if they are not listed on the account whatsoever.