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Being in a tremendous amount of debt can be a very stressful experience. You have so many bills that you cannot pay, and your bank account is quickly dwindling. Your credit score has dropped significantly, so your options are few. When you do not know where to turn, debt settlement could be your best option.

What is Debt Settlement?

Debt settlement includes negotiating with your creditors for a reduced payment amount. When you are in a tremendous amount of debt, your credit cards might be high, and you might have numerous loans that you cannot pay. Debt settlement can help you greatly reduce your bill. You get debt free by not having to pay everything, saving you thousands of dollars.

How does Debt Settlement Work?

When a debt is settled, you convince a creditor to agree to accept less money than you owe. Creditors usually will not settle your debt unless you are already behind on your payments. Your credit score has already been damaged, and you do not make enough money to keep up with your monthly obligations. While you are in a debt settlement plan, you stop making payments to the creditor and pay a debt settlement company. When you have enough money in your escrow account, the company will pay off your debt.

Advantages of Debt Settlement

Some of the benefits of debt settlement include:

  • You can avoid bankruptcy
  • Relief from overwhelming debt
  • Get out of debt quicker
  • Lower monthly payment
  • You can reduce debt up to 70%

Disadvantages of Debt Settlement

There are drawbacks of debt settlement. These include:

  • You may owe taxes on the debt settled
  • Your credit score will be impacted negative
  • Your account will be delinquent until paid

Texas Debt Settlement Laws and Regulations

Texas has numerous laws in place to protect people in debt. If you send a cease and desist letter to the collection agency, they must stop contacting you. Texas law does not permit creditors to harass The collection agency and the credit cannot harass you. In addition, your home and wages are protected. Creditors cannot go after your assets. The statute of limitations on suing over a debt is 4 years.

Economics in Texas

In Texas, the average credit score stands at 649, and the average credit card debt is $5960. The economy in Texas ranks 2nd in the nation, only behind California. The state is above the nation’s average in credit card debt. The citizens of Texas have some of the lowest credit scores in the United States. Identity theft is very high in Texas.

Wealth and Poverty in Texas

Texas is a very diverse state that includes both the very wealthy and the very poor. The wealth is in the majority of metro areas. The poverty rate in the state stands at 14.4%, much higher than the national average. The median household income in Texas is about 43,000, which is well-below the country’s average.

Who Qualifies for Debt Settlement?

In order to enter into a debt settlement program, you must meet the following qualifications.

  • You must be able to make the minimum monthly payment
  • You must owe more than $7500
  • You must be behind on your payments
  • You must have a financial crisis

What Debts can be Settled?

The debts that qualify for debt settlement include:

  • Credit cards
  • Unsecured personal loans
  • Bank and Overdraft fees
  • Business debts
  • Gas cards
  • Student loans (in some cases)

What Debts cannot be Settled?

There are certain types of debt that do not qualify for debt settlement. These include:

  • Mortgage loans
  • Car loans
  • Child support
  • Back taxes
  • Gambling debts
  • Speeding tickets
  • Current litigation accounts
  • Bail bonds

Debt Settlement Companies

When choosing a debt settlement company, make sure you find a reliable one. According to, any company that promises quick relief through debt settlement is lying to you. You will stop making payments altogether, and it could take months or even years to settle the debt. It is possible that you will have lawsuits filed against you. Just make sure you research a company before you let them handle your debt.

You can attempt to settle the debt yourself, or you can hire a debt settlement company. Whatever the reason your debt escalated, debt settlement can give you a solution to your financial problems. If you think debt settlement is right for you, research your options to see what is best for your needs and financial situation.