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Texas has some solid protections in place when you work with a debt settlement company to eliminate your obligations.
Work with a Registered Debt Settlement Company
While you can settle your debts on your own, often it can be helpful to work with professionals who are knowledgeable about the best way to negotiate with creditors. A debt settlement company can (for a fee) help you organize your debts, and negotiate a settlement with your creditors.
Before you commit to work with a debt settlement company in Texas, though, it's important to make sure that the company is registered. Texas has a stringent law on the books. Chapter 394 of the Texas Finance Code is known as the Texas Debtor Assistance Law. Not only does it spell out your rights as a debtor (rights that go beyond the federal government's Fair Debt Collection Practices Act), but it also specifies that debt settlement companies that wish to operate in Texas -- even if they aren't located in Texas -- must register with the Texas Consumer Credit Commissioner.
Resources to Use
As you compare debt settlement companies, go to the credit commissioner's site for a list of registered debt management services providers. If your debt settlement company isn't on the list, don't sign up.
If you have been the victim of a debt settlement company that engages in less than savory practices, Texas law has some provisions that allow you to gain relief. In some cases, you might be able to recover the money you've paid, damages that you suffered as a result of the company's practices, and even an injunction that requires the company to stop operating illegally.
Debt settlement can be a hard road to travel. There are debt settlement companies that can help you negotiate with creditors to pay less than you currently owe. However, if you live in Texas, you should make sure that the company you choose is approved by the Consumer Credit Commissioner.
Credit counseling works by helping you learn more about money management, and helping you create a plan to get out of debt. Debt management plans might come in one of two forms:
A credit counseling agency can help you create a debt payment plan, and then you execute it. Your debt payment plan often includes a budget, and spells out which debts to pay down first, and how much money should go toward each debt every month. In many cases, you can access reputable credit counseling tools free of charge, and receive helpful information on how you can get back on track.
Managed Debt Repayment
Credit counseling agencies can also provide you with a managed plan. After evaluating your financial situation, the counselor makes it a point to determine how much you can pay each month. You make one lump sum payment to the credit counselor, and the agency either distributes the payment to your creditors, or negotiates a settlement. Your payment to the credit counselor also includes an administrative fee that the agency keeps.
In order to offer counseling services in Texas, though, credit counselors offering managed debt repayment plans have to go through an application process and be individually approved. Chapter 394 of the Texas Finance Code makes it clear that debtors have specific protections, and that only approved credit counselors can help Texans negotiate their debts and improve their situations.
Debtors in Texas also have other protections under Chapter 394, which work along with the federal law known as the Fair Debt Collection Practices Act (FDCPA). The Texas version is broader in scope, and sets up more protections for those who have debts. Texas protects debtors from anyone attempting to collect a debt, rather than just for those working for designated collection agencies and professional lawyers.
Those who have credit problems can get help. The federal government offers a list of approved credit counselors by state, and it's possible to find out more about counselors registered in Texas from the Office of Consumer Credit Commissioner.