If you owe a significant amount of unsecured debt and don’t think it’s possible to pay it all back, a debt settlement plan may be a viable course of action to manage your debt. Sometimes filing for bankruptcy just isn't the best solution and it’s important to explore all your debt management and debt relief options before committing to one course of action. Maybe you earn too much money or perhaps you own several pieces of real estate. Whatever the reason, there are other, and often more affordable, options available to you than bankruptcy, one of which may be debt settlement. 


It’s important to know debt settlement is different from debt consolidation, which simply redirects your debt obligations without reducing the debt amount.  Also, beware of businesses that, without your own legal counsel, present you a settlement agreement.  Commonly, these “agreements” don’t reduce your debt at all and may in fact allow your creditors to sue you. If you’re considering hiring someone promising to settle all your debts for a monthly low payment, please read the fine print and ask them how they’ll support you should you be sued.  When facing mounting debt and to have it correctly settled, hiring an expert legal professional is affordable and is one of the shrewdest decisions you can make.   Plus, you’ll get immediate stress relief because in serving you one of my first acts is to issue a "cease and desist" letter to all your creditors instructing them to communicate directly with me – not you (effectively stopping harassing phone calls).   


As a debt settlement attorney my commitment is to open options for those with significant debt and preference to avoid filing bankruptcy.  A debt settlement proposal can involve you issuing a single lump-sum payment to eliminate the remaining balance due on your account, and then closing your account. A debt settlement proposal can also involve lowering the principal balance and entering into an affordable payment plan.

Outcomes of course depend on circumstances but for example, you could possibly benefit from issuing a debt settlement proposal to at least one of your creditors.   I have been effective in negotiating the settlement to where my clients only had to pay cents on the dollar of the debt due. Keep in mind,  circumstances vary, and creditors have different bottom lines. Since it’s not a legal process, debt settlement requires nothing to file with the court.  Just know that when a debt isn't fully paid it temporarily hurts your credit score (with the settlement). However, by bettering your financial situation, a debt settlement enables you to increase your credit score over time.  There is an upside to how the ‘sting’ of debt settlement on your creditworthiness won’t be of the same long-term effect as a Chapter 13 bankruptcy. 

Debt Settlement in Texas:  How it Works


For some perspective of the options you may be considering, debt settlement (on average) provides a speedier means of relieving your debt in Texas in comparison  to debt consolidation or debt counseling. Beyond simply lowering the interest rate, debt settlement can lower the total debt amount due.   In some cases, upwards of 60+% of the total debt can be removed from the balance, but results vary. Debt Consolidation and Credit Counseling, in contrast, do not affect the total balance of debt due, only the interest rate.


Generally, only unsecured debts that are at least 90 past due on an account can be settled and debt settlement is effective because most creditors are willing to settle for a partial amount of the full debt, to close out an account, rather than lose the entire amount owed in a bankruptcy proceeding. 

Texas Debt Settlement can include the following types of debt:


  • Credit cards
  • Department store cards
  • Signature loans
  • Personal lines of credit
  • Old repossessions
  • Other unsecured debts
  • Old judgments
  • Private student loans in default


The following types of debt do not qualify for Debt Settlement in Texas:


  • Home mortgages
  • Federal student loans
  • Car loans
  • Other secured debts
  • Credit Union debts


Although it’s only unsecured debts that can be settled (such as medical bills, credit cards, and other unsecured loans lacking collateral), in serving you I will want to gather information about the entire scope of your debts, plus your credit report from each of the three credit bureaus at this time.  From this information I will be able to capture an accurate and clear picture of your financial situation, essential for the best advisory possible.

Debt Settlement in Texas, a Summary Understanding


In a nutshell debt settlement may be a viable path if you have (or have access to) cash.. A lump sum payment will get you the biggest discount but creditors will also lower the principal and renegotiate the payments.    When creditors do accept proposals lower than the total owed, they commonly require swift payment (within 30 days).  Thus, if you can possibly pull the cash, debt settlement could be an excellent strategy for you. Debt settlement might also prove a wise and prudent solution if you have significant monthly disposable income in your budget and quickly save up cash equal to a significant portion of the total debt to be settled (and are not currently paying on those debts). 


There are other scenarios wherein debt settlement can make a lot of sense for you, situations and circumstances are unique, so call me if you’re interested in a deeper dive into debt settlement strategy.  I would be remiss for not mentioning for the purposes of debt settlement, not all income is created equal. Money from a retirement account as in an IRA or 401K is a painful personal finance decision. If the retirement account isn't a "Roth" plan, funds removed will be taxable income that you will pay income taxes on. Those under 59 ½ years old will also have to pay a tax penalty. Lastly, with debt settlements, all debt forgiven is considered taxable income.


In serving you as your debt settlement attorney I will handle all the negotiations with your creditors to secure the best debt relief that you can possibly obtain.  Everything starts with a conversation so I invite you to call me for a free consultation so I can learn of your situation, financial needs and goals and advise you of the best legal solutions available to you.