The First Step In Understanding Texas Debt Laws: Hire A Lawyer

Article Written By: Peter Stabler

Many people who owe money for credit cards, medical bills, student loans, court judgments, or other types of debt face annoying letters and phone calls from creditors and collection agencies. Working with an expert on Texas debt laws can give you a chance to review your options and reduce the stress of collection attempts.

If you are being harassed by creditors, the first thing to do is hire an attorney. An attorney can review your debts and make sure that they are not time-barred (that is, that the statute of limitations on collecting them has not passed). If the statute of limitations has expired, a letter to your creditors will probably put a stop to the phone calls and letters for good.

Another good reason to get a lawyer is that the Fair Debt Collection Practices Act states that, once a collection agency knows someone is working with an attorney, it can no longer contact the debtor directly. Instead, all communications must be directed towards the person's lawyer. A collection agency that violates this law is subject to stiff financial penalties. Therefore, retaining an attorney generally puts an immediate end to annoying collection calls.

People who retain an attorney should speak with him or her about their financial options, including debt settlement. Debt settlement means that the creditor or collection agency accepts less money than they are owed and write off a portion of the debt. An attorney who is experienced in reaching settlements on behalf of their clients can sometimes get as much as 90 percent of the debt forgiven.

If your creditors are not willing to settle, the next option your attorney will probably discuss with you is bankruptcy. Bankruptcy allows you to get out from under most of your unsecured debt and "start over" again financially speaking.

An individual can elect to take either Chapter 7 bankruptcy or Chapter 13 bankruptcy. Due to Texas debt laws, which protect most of the assets of people seeking bankruptcy, Chapter 7 essentially erases a person's unsecured loans. Chapter 13 restructures those loans. The debtor then works out a payment plan with the court and, over a period of around five years, pays off most of the money owed.

There is one other choice your lawyer may discuss with you: do nothing. Not doing anything to clear up outstanding loans is a gamble, because your creditors can take you to court. If they win a judgment against you, they can collect by arranging for some of your wages to be diverted to them. Not all creditors, however, want to spend the time and money to take you to court. Others take almost every case to court simply on principle. If your lawyer has been around for awhile, he or she will know which creditors are likely to take legal action and which are not. Based on this knowledge, your lawyer can help you decide whether doing nothing is a practical option in your case.

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