Our attorneys

Texas Debt Consolidation

If you are a resident of Texas facing financial problems, debt consolidation could provide the best solution. A debt consolidation program will merge your multiple debt payments into a single monthly bill at a low interest rate, saving you from drowning in further debts.

How does a debt consolidation program work in Texas?

Debt consolidation works the same in every state. It provides a single loan with a low interest rate, which is used to pay off the other existing debts at a single payment. This can be a great option for those who are still employed without disturbing your monthly budget.

Debt relief programs are customized and selected with your financial needs and situation in mind. In order to find a legal solution to your debt problems, and to get any advice you need, you should consult a debt consolidation lawyer in Texas. The attorney will help you decide which program is right for you, whether you need to consolidate multiple debts or negotiate with your creditors.

Debt consolidation programs aim at replacing all your multiple debts with a single affordable payment which allows you to pay off your current debts and avoid future ones.

How to go about a debt consolidation loan

In Texas you can either choose a personal debt consolidation loan or a home equity loan to pay off your debts. If you do not have good credit, then qualifying for these types of loans can be difficult. A personal debt consolidation loan is preferable in many circumstances, as it saves you from losing the equity in your home.

Home equity loans

Getting a home equity loan to fund your debt settlement program can be an option. A home equity loan is encouraged because when a client gets a home equity loan or refinances his home the settlement process becomes easy. You can use this money to consolidate your debt or a lawyer can negotiate with your creditors based on the collateral, and arrive at a settlement. The whole process is time saving and takes as little as 4 to 12 months to complete.

Debt Consolidation-is it the right choice for you?

Though debt consolidation has a number of advantages, it is not the best option for some. In Texas, credit card laws differ from one debt situation to the other, depending on the facts. If you are not careful, you may end up paying more than you originally owed.

Obtaining a new loan can always be risky, when you’re already deep in debt. But the risks can be avoided if one is careful about the outstanding payments and interest rates. Moreover, you should not open any new credit cards accounts during this time, which may worsen your debts. Debt consolidation programs are only effective when used wisely.

Advantages of consolidating debts:

• Reduce monthly payments.
• Eliminate or reduce interest rates.
• Resolve serious credit issues of customers to make them debt free.
• Manage financial constraints faced due to serious illness, accident, credit card losses, divorce, stock market losses etc.
• Reduce the term on debts.
• Rebuilt or preserve credit.
• Have multiple debts marked as paid on your credit report.
• Reduce financial stress in order to live a debt free life.

What other relief programs can you consider?

If you have multiple debts, consolidation is not the only option. You can either go for a debt settlement program or bankruptcy.

Debt Settlement: When the amount of your debts is out of control and you are falling short on payments, debt settlement with your creditor may help. In Texas there are various debt settlement companies that can work out a good deal with your creditors. If you select a debt settlement attorney with the right expertise can save you money as well. Many programs in Texas allow you to repay your loans within 2-4 years if handled carefully.

Payday Loans: Payday loans can be risky, but can solve short term debt problems if handled correctly.

Bankruptcy: If the situation is critical and you cannot afford your minimum payments, your last resort should be to declare bankruptcy. Though bankruptcy hampers credit score recovery, it can resolve your debt issues if everything else fails.

Debt Settlement in Texas

Apart from debt consolidation, the other major relief program that can help reduce debts is debt negotiation. During debt negotiation, you or your authorized representatives negotiate with your creditors to get your accounts settled for an amount far less than that you originally owed.

Negotiation can be a good solution for consumers who are deep in debt and falling behind on the minimum payments. Texas has laws highly favorable to debtors, providing them with rights and protections against past unsecured debts like credit cards, medical bills, and personal loans. When considering a debt negotiation program, you should carefully consider two of the main drawbacks. They are:

• Your creditor may use sue you for the total amount of the loan if negotiation fails.
• Your creditor may harass you until the debt is settled if you attempt to negotiate by yourself.

How the debt settlement negotiation process works?

Debt negotiation is a process where you or a company on your behalf negotiates with your creditors to reduce the amount you owe. A successful debt settlement program can save you a lot of money and help you become debt free within short time. But the process can have an adverse effect on your credit report and may be time consuming depending on the amount of your debt.

What is the minimum debt amount in order to be eligible for debt settlement program?

Though the amount varies from company to company, the minimum amount required for debt settlement should be more than $10,000, and each balance must be above $1000 in order to be included in the program.

Under what circumstances a creditor can pursue legal action?

1. If the creditor decides that an attorney is the best means for collection – This can be effective only when the due is of just six months past or further less. A settlement company cannot control or predict its occurrence but many creditors use this tactic to collect debts.
2. When the creditor have tried out every possible means of collection but failed, the only option that remains is filing a lawsuit. It is possible only when the account has been handled by a variety of other collection agencies and the account has been due for quite some time. In order to avoid these circumstances you should make sure that your accounts are settled before such situations occur. Moreover it is advisable not to become involved in a debt negotiation program for longer than 3 years.

How will a Debt settlement program affect your credit report?

Debt negotiation has a certain negative effect on your credit score, but not as devastating as bankruptcy. With debt negotiation, you can start improving your credit once you start making timely payments through the program. The effects of debt settlement will be on your credit report for seven years and include your past due payments, charge offs, accounts sent to collections, and if needed, judgments.

How can Texas collection laws benefit you while settling debts?

The Federal Fair Debt Collection Practices Act (FDCPA), states that a collections agency engaged in collecting a debt should stop all communication with the consumer once 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 negotiations. Texas law also limits harassment from the collection agencies and from the original creditor as well. Normal phone calls are not restricted under Texas law, as they are a necessity to carry out daily proceedings and updates.

If you have any questions or want to find additional resources, a settlement lawyer in Texas can help you.

When a debt settlement program may be right for you?

• You do not have any savings.
• You cannot afford the minimum payments on your credit cards.
• You are getting abusive calls from debt collectors.
• You are taking out cash advances on your credit card to pay other debts.

Things you should take care of while in a debt settlement program:

• You should be truthful about your debts to your debt settlement attorney. Do not hide any information that can be helpful for the case.
• Do not incur additional charges on the account you would like to settle.
• Plan your monthly budget so that you can save something at the end of the month to pay off certain debts.
• Stay in regular touch with your debt negotiation lawyer so that you know what’s going on and can update information as needed.

Bankruptcy in Texas

If you are finding it impossible to repair your credit through a debt settlement program, you might consider settling your debts through Bankruptcy.

In order to decide whether it is the right time for filing for bankruptcy you should consider the following:

• You are only able to pay the bare minimum amounts on your bills
• You are finding it impossible to get out of debts within the next five years.
• You are getting abusive threats and notices about your mortgage or loan being foreclosed.
• You are in a severe financial crisis due to accident, divorce or illness.

Bankruptcy does not get rid of all debts. Some debts you are still responsible for are:
• Provision to your spouse under a separation or divorce agreement.
• Child Support.
• Current back taxes.
• Student loans.
• Recent gross purchases.
• Fines or penalties due to any government agencies
• Fraudulent debts.
• Payday loans of $825 taken out within 70 days of filing

Bankruptcy Abuse Prevention and Consumer Protection Act in Texas-An overview

The Bankruptcy Abuse Prevention and Consumer Protection Act brought to effect by the President on October 17, 2005 aims to reduce the number of people filing for bankruptcy. The characteristics of the act include:

• New limitations on Chapter 7
• Enhanced payments on Chapter 13 payments
• New presumptions to be taken against debtors with increased penalties
• Reduction of judicial discrimination to balance competing interests

Chapter 7 Bankruptcy

If a debtor wants to emerge out of a financial crisis and start afresh, then Chapter 7 of the Bankruptcy Code is the best way to achieve it. Under Chapter 7 Bankruptcy Code all non-exempt property of the debtor is sold and the amount collected is distributed among the creditors.

How to file Chapter 7 Bankruptcy in Texas?

• In Texas you can file a bankruptcy by filling out the official petition and a document known as "Statement of Financial Affairs." The statement includes the priority debts (including taxes), "secure" debts (including home mortgages and auto loans) and all unsecured debts of any kind. It is important to file out the statement accurately as any debt not included will not be discharged by the bankruptcy, and could lead to having your bankruptcy petition denied.
• The court will then use the Means Test to determine whether or not you qualify for Chapter 7. Under the Means test you must be unable to pay back your debts from your disposable (after-tax) income as well as your necessary living expenses or make less than the median income for a family in your state, as determined by the IRS and the last Census.
• If you do qualify for Chapter 7 and have filed your case, your creditors are immediately notified and prevented from collecting the debts, through an automatic stay.
• Normally the trustee takes control of your property and sells it to pay the expenses of the administration of the case. The rest of the money is distributed among the creditors with certain allowed claims. If you get hold of any money after the case is filed, that remains beyond the reach of creditors.

How does Chapter 13 Bankruptcy work in Texas?

In Texas Chapter 13 Bankruptcy, also known as the Wage Earner Bankruptcy, is designed to help you to pay back your debts over 5 years. It allows for the repayment of some or all of your debt on better terms with low or no interest. Unlike with Chapter 7, Chapter 13 allows the debtor to use whatever income they may have in the future to pay off the creditors.

A bankruptcy attorney in Texas can work with your creditors to safeguard your interests under the supervision of the courts. During some payment options you are allowed to keep all of your property, except what the court needs to approve of a new fee structure for repayments. A written plan is developed that shows all the details of the transactions that will occur, and their duration. The time period for repayment is normally thirty to forty-five days after the case begins. Chapter 13 has some advantages over Chapter 7 Bankruptcy, as Chapter 13 allows for the full discharge of your debt. Moreover with Chapter 13 filing a repayment plan can be created even if creditors disagree with it, if it is approved by the court.

Payday loans in Texas

Many people face a period of financial crisis just days before their pay check arrives, and friends and family members cannot always lend a hand. Thus it becomes inevitable to look out for some instant payment options. It is here that payday loans come into prominence. But apart from the fact that they provide an immediate solution, the effects of these loans can be disastrous.

Texas payday lenders comprise of about 400 payday, auto title, and other small lenders operating out of 2,500 storefront locations across the state. The payday loan offered in Texas are short-term loans, usually $500 or less, at an average of 500% APR for a two-week period. In most cases, the borrower’s next paycheck acts as collateral for the loan.

Before you decide to take out a payday loan in Texas you should be aware of the restrictions on payday loans, and make sure that the lender you choose is licensed to lend in Texas.

Restrictions on payday lenders

• In Texas every payday lending agencies should have a license to lend.
• There are no restrictions concerning the number of payday loans a borrower can take out at one time.
• Texas permits payday lenders to fix their charges and interest according to the ability of the borrower to pay. The effective APR for a 14-day $100 loan is 309%.
• The collective amount of a single cash advance cannot exceed $100-$ 350 at a time.
• A payday loan may not be for less than 7 days and not more than 31 days.
• Roll over and extensions of payday loans are not allowed by Texas State law.
• The Texas payday lenders can impose an additional fee of $10 on each loan.

In order to be abide by the payday loan laws in your state, consult a payday loan attorney.

Federal Fair Debt Collections Act in Texas:

Texas, like every other state in the US follows the Federal Fair Debt Collection Practices Act (FDCPA), in addition to providing a few extra protections to debtors.

Both the FDCPA and Texas law prohibit any misrepresentation of facts, abusive, unfair or threatening statements, or any harassment from the debt collectors. A collections lawyer who works with consumers to save them from the abuse and threats of creditors can help you as well. In Texas, it is a violation of state law if a creditor engages the services of a third-party debt collector who is known to have previously violated Texas debt collection laws.