It’s scary when the bills start to mount up, and scarier still when you start getting nasty letters and phone calls from companies you can’t afford to pay. Rather than trying to find a solution on your own, consult with an expert on Texas debt laws. This will give you a better idea of the choices open to you.
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.
Once you’ve stopped the intimidating collection calls and letters, you and your attorney figure out what you need to do next. One possible step is attempting to settle with creditors–in other words, getting them to accept less money than they’re actually owed. An experienced attorney can usually convince a creditor that it is smarter to settle and walk away with some money than try to insist upon the full amount and get nothing.
If your creditors are not willing to settle, another option to discuss with your lawyer is bankruptcy. Bankruptcy allows you to get free of most unsecured debt, although there are exceptions such as student loans, child support, and fines.
There are two types of personal bankruptcy. Theoretically, in Chapter 7 bankruptcy, your assets are liquidated (sold) to pay as much of what you owe as possible, and the rest is written off. In practice, however, Texas debt laws offer generous protection for your assets, and it is unlikely that you will lose anything. In Chapter 13 bankruptcy, your debt is reorganized, and you and the court work out a payment plan to pay all or a portion of what is owed over the next three to five years. Both types of bankruptcy will stay on your credit report for up to ten years.
A person who owes money and elects not to take any action may be sued in civil court. If the judge finds that the creditor is owed the money, he or she enters a judgment against the debtor. The creditor can then take further steps to collect the money like contacting the debtor’s employer and having the debtor’s wages garnished. Taking someone to court and following up to collect a judgment is not inexpensive. Many creditors threaten lawsuits but never actually follow through. Others are notorious for taking debtors to court. An experienced attorney knows which creditors mean business and which are making groundless threats, and can advise his or her client accordingly.
Click here for more information on Texas Debt Laws and Texas Collection Laws
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