Sarah Edwards | August 08, 2023
Edited by Hannah Locklear
Summary: If you’ve been sued for a debt in Texas, you can reach out to the opposing party to settle the debt at any stage of the lawsuit. To settle a Texas debt lawsuit, you should respond to the case, send a settlement offer, and get the agreement in writing. SoloSettle makes the settlement process easy and painless.
You probably have a few debts you're responsible for, like a credit card or medical bills. If you don’t keep up with your payments, your creditor will likely step up collection efforts. You might receive a lot of calls, emails, or letters from the creditor or a debt collector working on their behalf.
If you don’t return to making your monthly payments, your creditor will probably charge off your account. They may sell it to a collection agency or take legal action against you.
When you get sued for a debt, creditors and debt collectors will seek a judgment that allows them to freeze your bank account or garnish your paycheck. In short, they hope you don’t respond in time and lose the case automatically when the judge orders a default judgment against you.
You want to avoid a judgment and settle the matter with your creditor before your court date. You can do so through the debt settlement process.
There are three steps you’ll want to be aware of in the debt settlement process.
We’ll take a closer look at each of these steps below, or, you can watch this video to learn more:
Your creditor will start the legal process against you by filing a Petition with your local Texas court. A Petition lists the reasons for your lawsuit, such as nonpayment of debt. It will also indicate the amount of money you owe, including interest and penalties.
You’ll want to respond to the debt lawsuit with an Answer. An Answer is your defense of the case. When you file an Answer, your creditor cannot ask the judge for a default judgment against you. Instead, the judge must review your defense and any additional evidence you provide. You’ll also be able to argue your case in court.
Even though you plan to avoid court and settle your debt with your creditor, you should still file an Answer. If your efforts at settlement fail, you’ll have another way to defend yourself from a judgment.
You have 14-20 days to respond to a debt lawsuit in Texas. SoloSuit can help you draft and file an Answer in minutes.
Step two involves evaluating how much you can offer in a debt settlement. Look at your savings and any expected income. If you don’t have much cash, consider selling a few things you don’t need or taking on some contract work. You can also ask family or friends for a loan.
It’s best to offer at least 60% of the total value of your debt in a settlement. That’s enough to show creditors you’re serious about settling. They’ll consider your offer and determine whether it’s more cost-effective to accept a single lump-sum payment than to undertake the administrative burden of seeking a judgment.
Remember that creditors aren’t out to make your life horrible; they’re just seeking repayment for a debt you owe. However, they know that a full collection isn’t always possible, so they might accept a lesser amount if they understand your financial circumstances.
You might go through a few rounds of negotiations with your creditor before you come to an agreement. Stick to your guns and don’t accept an offer you know you can’t follow through with. If you do and don’t make the required payment, your creditor will follow through on the lawsuit against you.
Once you have a deal with your creditor, you’ll want to get the agreement in writing. If questions later arise, you’ll be able to refer to the contract.
Your agreement should stipulate how much money you’ll pay your creditor and when it’s due. It should also indicate how you’ll send your payment.
The agreement should release you from the remaining debt balance. Your creditor will agree to drop the lawsuit against you and report the account settled to the credit bureaus.
Generally, the creditor or debt collector will draft the settlement agreement and file it into the case. Be sure to review the document carefully before signing anything. On top of this, consider notarizing the signature to make it even more official, making it impossible for the opposing party to back out.
Here’s a debt settlement agreement example, with a preview below, so you know what to look for.
We’ve walked through the three steps of debt settlement. Let’s review them with a hypothetical example.
Example: Sarah, who lives in Texas, hasn’t paid her monthly credit card bill to Complete Financial in six months. She had an unexpected car repair expense one month and gave up on getting back on track with her payments. Complete Financial decides to take legal action against Sarah by filing a debt lawsuit against her in Justice Court. In the court Complaint, Complete Financial alleges Sarah hasn’t paid her debt and owes $2,000. Sarah responds to Complete Financial with an Answer before the Justice Court deadline, which is 14 days in Texas. She uses insufficient validation of the debt in her response to the lawsuit. Next, Sarah uses SoloSettle to contact Complete Financial to arrange a settlement. She offers the company $1,200 to settle her obligation. Complete Financial agrees to the settlement offer. After both parties sign the contract, Sarah transfers her money. Complete Financial drops the lawsuit against Sarah and reports her account settled.
Texas abides by the Fair Debt Collection Practices Act (FDCPA), which places certain restrictions on debt collection. In particular, creditors and debt collection agents cannot take any of the following actions against a consumer:
Debt settlement companies that enroll clients for their programs must fulfill certain requirements under Texas Finance Code FIN § 394.208. In particular, debt settlement companies must:
Texas has additional rules protecting consumers from debt service management companies under Texas Finance Code FIN § 394.212. Collectors cannot take any of the following actions:
The statute of limitations in Texas caps the time a creditor has to pursue a lawsuit against a debtor. Under TX Civ Prac & Rem Code § 16.004 (2019), there is a four-year limit to lawsuits for written and oral contracts and debts on account. After the debt passes the four-year limitation, it becomes time-barred.
Several debt settlement companies can assist you in the debt settlement process. Others are actually scams that can make your situation exponentially worse.
Below are some trusted debt settlement companies you might consider.
SoloSettle, powered by SoloSuit, helps people facing a debt lawsuit settle their obligations through a tech-based approach. We send and receive settlement offers on your behalf and manage the documentation and payment so you don’t have to.
Many consumers prefer SoloSettle over traditional debt settlement companies for a few reasons:
Check out this review form a real SoloSettle customer:
“I'm very thankful for SoloSettle.. Having a third party negotiate the settlement was instrumental in resolving this case and saved me from two giant headaches: 1) I didn't have to deal with the plaintiff's lawyer and 2) I didn't have to go to court. I also love that the payment was processed through SoloSettle. I was nervous about sharing my personal financial data with the other side, but SoloSettle protected that for me. I hope I never get sued again, but if I do, I would use SoloSettle again in a heartbeat.
SoloSettle really saved me a ton of time and heartburn and kept me from having to be my own lawyer in court.”
Accredited Debt Relief provides debt settlement services to individuals with unsecured debts like credit cards and medical bills. To qualify for its programs, you must have at least $10,000 in debt and agree to make monthly payments to the company. Accredited Debt Relief negotiates your debts one by one, and programs last up to four years.
National Debt Relief is one of the biggest debt settlement companies in the U.S. Since 2009, the company has helped thousands of people settle debts with their creditors. Clients who enroll in its programs pay 15% to 25% of the value of their debt for the company’s services.
Another large provider of debt settlement services is Freedom Debt Relief. The company has helped over 650,000 clients resolve their debts since 2002. Those interested in the program can expect it to last between two and four years. Like National Debt Relief, Freedom Debt Relief charges clients a 15% to 25% fee.
Century Support Services is another debt relief company that’s popular with customers. Since 2012, the organization has helped customers resolve more than $1.7 billion in debt. Century Support Services charges clients 18% to 25%, depending on how much debt they seek to settle.
If you’d like to try settling your debts with your creditor, you can contact them via email, phone call, or letter.
Email is the easiest way to start negotiating your debts. It’s quick, and you’ll have time to consider your creditor’s messages before responding. Email also provides a written record of the conversation between you and your creditor, which is helpful if you need to refer to it later.
Some people prefer to speak directly with their creditors. If you decide to phone your creditor, we recommend you record the conversation. That way, you’ll have it as proof of any deal you reach with your creditor.
Under Tex. Penal Code § 16.02, only one party must consent to record a phone conversation. The party granting their consent will be you.
You might have other questions regarding debt settlement in Texas. Here are a few of the most common inquiries.
A reasonable offer to settle a debt is usually 50% to 60% of its value. That’s typically enough for your creditor to seriously evaluate your offer. However, if you can’t afford that much, offer what you can and explain your financial circumstances to the creditor.
Yes, you can still settle your debt after receiving notice of a lawsuit against you in Texas. Determine what you can afford in a settlement and start negotiating with your creditor. Make sure to get your agreement in writing before transferring any money.
It’s best to pay off a debt in full. Paying your debt maintains your relationships with your creditors and your credit score. However, if you’re facing a debt lawsuit or are in deep financial trouble, settling the debt can prevent a judgment.
We have a few other guides you can review concerning debt relief and debt collections in Texas. Check them out below.
It’s possible to avoid a judgment and overcome your debt with a creditor. Using our three-step process, you can negotiate a settlement and move on from a challenging financial situation.
SoloSuit makes it easy to fight debt collectors.
You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.
SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.
Here's a list of guides for other states.
Being sued by a different debt collector? Were making guides on how to beat each one.
You can ask your questions on the SoloSuit forum and the community will help you out. Whether you need help now are are just look for support, we're here for you.
Is your credit card company suing you? Learn how you can beat each one.
Need more info on statutes of limitations? Read our 50-state guide.
Need help managing your finances? Check out these resources.
Out Debt Validation Letter is the best way to respond to a collection letter. Many debt collectors will simply give up after receiving it.
"Finding yourself on the wrong side of the law unexpectedly is kinda scary. I started researching on YouTube and found SoloSuit's channel. The videos were so helpful, easy to understand and encouraging. When I reached out to SoloSuit they were on it. Very professional, impeccably prompt. Thanks for the service!" - Heather