Taking into consideration the savings, in most instances it’s worth doing if you find yourself in any of the abovementioned situations. The consumer can find himself or herself saving close to 50% of what they currently owe and become debt free within two years or less. When you compare the savings of money and time with how long it would take to become debt free via minimum payments and high interest the difference is startling.

    As with any debt relief resolution, however, there are potential drawbacks to debt settlement that should always be understood prior to enrollment. For starters, debt settlement may have a negative impact on your FICO credit score, particularly during the program.

   
   To put this point in perspective, however, it’s essential to remember the following:

1) any third party consumer credit counseling program and even secured or unsecured debt consolidation loans from big banks will affect your credit negatively in the eyes of lenders,

2) the effect on your credit in the long-run is very small, given the fact you’ll be becoming debt free upon completing the program (amount owed is 30 percent of your credit score, compared to credit history, which makes up 35 percent of your score) and

3) if you’re falling behind or about to fall behind anyway, then your credit has been or will be affected negatively anyway.

There are really just two noteworthy drawbacks to debt settlement:

1) The possibility of a lawsuit and 2) the reality of collectors harassing you until the debt has been settled and paid.

   However, if you are a consumer in the great state of Texas these two concerns about debt settlement are greatly reduced. The reason Texas is so debt settlement friendly is due to its laws. These debtor friendly laws offer consumers a great amount of rights and protections concerning past due accounts such as credit cards, medical bills and other various unsecured debts.

    So how do these laws benefit the consumer who wants to pursue debt settlement in Texas?

    In every single state there are laws in place regarding how collections companies can pursue a past due debt. Many states’ laws say that a cease and desist letter will make the collector have to stop calling. However in the majority of states this cease and desist letter will only apply to the third party debt collectors (The people who buy your debt after it has gone six months past due).

    Texas is ahead of the game for debtors and takes it one step further, Texas’ law states that the cease and desist letter will not only stop the third party collectors from calling but also the original creditor as well (Which is the lender who originally lent you the money, such as Bank of America).

    In most states the original creditor has the right call all they want, but not in Texas. Although most debt settlement companies should be able to reduce the calls from the original creditor, the cease and desist letter in Texas will ensure that the debtors will receive practically no harassment at all, almost eliminating that drawback of debt settlement.

    Ok, so how does Texas protect me from the other drawback of a lawsuit?

    First off Texas debt settlement clients will have their wages completely protected from being garnished, which will give the collector all the more reason to settle. Even though the vast majority of creditors/collectors are willing to settle regardless of the state you reside in, Texas clients are in an even stronger position for negotiation due to these debtor friendly laws in place.

    Now it is pretty rare for these collectors to sue in the first place due to how many people fall behind on debts and the cost of money and time to go about suing. That being said it is impossible for any debt settlement company to guarantee that one of there client will not be pursued legally.

    Now, in the event that the client is sued and does receive a judgment against them there are usually two things they will look to do as far as collecting the debt goes.

    The first action many collectors would take once they obtain a judgment is to garnish wages. This means they contact your employer asking that a certain amount be set aside from each paycheck until the debt has been paid off. Fortunately for Texas debtors the laws are in there favor and wages cannot be garnished.

    Another action they would take with a judgment is to place a lien on your home, this obligates you to pay back the creditors with proceeds from the sale of your home or when you go to refinance the property. Fortunately again for debtors is Texas there is 100% homestead protection.

    In sum, these are major advantages for Texas debt settlement clients. Keep in mind that the vast majority of cases are settled successfully regardless of the legal advantages of the consumer. When you consider Texas state laws, debt settlement makes even more sense for the credit card companies, debt collection agencies, and most importantly, for the consumer.

    In conclusion the above stated advantages for Texas debt settlement clients are huge. You must however keep in mind that the vast majority of debt settlement cases are successfully settled without any legal action taken whatsoever.

    But when you consider the Texas state laws, debt settlement makes the most sense for all parties involved including the credit card companies, collection agencies and of course most importantly the consumer.