Debt Relief Services in Texas: What You Need to Know

Household essentials have skyrocketed in price, so people increasingly turn to credit to cover their bills. And, with the high interest rates on credit cards, it’s easy to accrue credit card debt.

In Texas, consumer debt is particularly common. On average, Texans had $7,467 of outstanding credit card debt in 2024, about 11% higher than the national average.

If you feel like your debt is out of control, debt settlement or debt relief services may be a good option. This guide to debt relief in Texas will help you understand your options and decide on a path forward.

How Debt Settlement Works

Debt settlement or debt relief is a financial strategy that could potentially allow you to settle with your creditors for less than you owe. Typically, you negotiate with your creditors to make a lump sum payment for a percentage of the outstanding balance. Creditors may agree to the settlement to ensure they recover some of the debt rather than risk losing the entire balance if the borrower is unable to pay or file for bankruptcy.

For example, if you have $10,000 of outstanding debt, you may be able to negotiate a settlement and pay off the debt by giving your creditors a $7,000 lump sum.

Debt relief is usually only an option for unsecured debt, including credit card balances and personal loans. Debt settlement isn’t an option for secured debt, such as car loans, mortgages, or federal student loans.

There are some downsides to debt settlement, such as fees and damage to your credit. However, debt settlement can be a useful option if your debt has gotten out of hand and you’re considering bankruptcy; it can help you eliminate your debt without dealing with the expense and the long-lasting consequences of bankruptcy.

Although you can negotiate with your creditors directly, working with a professional debt relief company is another option that can help you navigate through the process.

Texas Debt Settlement Laws

Debt settlement or debt relief companies are regulated by federal law, but Texas also has laws in place that affect the companies operating within the state:

Registration Requirements

Under Texas law, debt settlement companies must register with the Texas Office of Consumer Credit Commissioner (OCCC). During the registration process, the provider must submit an application listing the ownership, proof of a surety bond or insurance, a copy of their debt settlement contract, and a list of their fees.

Companies that do not complete this process cannot legally operate within Texas.

Debt relief companies in Texas can only charge these fees as the debt is settled.

Debt Relief in Texas: How to Find a Company

There are several companies that provide debt settlement in Texas. When researching your options, consider the following details:

• Licensing and registration: Texas law requires debt relief providers to register with the Texas OCCC. You can look up registered providers through the OCCC website.
• Accreditation: The American Association for Debt Resolution maintains a database of accredited debt relief providers nationwide. You can use the tool to find an accredited debt settlement company near you.
• Fees: Texas laws allow debt relief companies to collect their fees only when the debt is settled. Fees vary by company, but there are state limits on what providers can charge. In general, you can expect to pay 15% to 30% of your enrolled debt.
• Reviews: Look up customer reviews on sites like Trustpilot and the Better Business Bureau to learn about general customer experiences.

Other Debt Relief Options in Texas

Debt settlement can be a useful option for some consumers, but it’s not for everyone. Depending on your situation, one of the following options may be a better fit:

Balance Transfers

Best For: Those with good credit and modest levels of debt

If you have outstanding unsecured debt but haven’t missed payments and still have good to excellent credit, a credit card balance transfer may be a good alternative. With this strategy, you transfer your existing debt to a new credit card with a promotional annual percentage rate (APR), such as 0% APR for 12 months.

A balance transfer allows you to pay down your balance without interest, helping you save money and pay off your debt faster.

Debt Consolidation

Best For: Those with good credit with larger balances

If you have accrued a larger amount of debt — such as $7,000 or more — debt consolidation may be a wise approach. With debt consolidation, you take out a personal loan and use it to pay off your existing debt.

If you have good credit, you can usually get a debt consolidation loan with a lower rate than you pay on your credit cards, and you repay the loan in monthly installments over several years.

Debt Management Plan

Best For: Those with poor to fair credit who need help managing their debt

A debt management plan (DMP) is available through non-profit credit counseling agencies. Under a DMP, you make a single payment to the agency, and they disburse it to your creditors based on an agreed-upon schedule. Additionally, the counselor will work with you to help you create a budget, trim your spending, and improve your financial knowledge so you can better manage your money going forward.

Although these programs don’t lower your existing debt, the debt counselor can help negotiate lower interest rates and fee waivers, making it easier to tackle your balances.

You can find a non-profit credit counseling agency by visiting NFCC.org.

Managing Debt in Texas

Managing credit card debt in Texas can be difficult, especially with rising prices. If you feel like your debt has gotten out of hand, debt settlement is one way to regain control, but it’s critical to weigh the potential benefits and risks.

Alternatives like completing a balance transfer or entering into a DMP may also provide debt relief in Texas; which option is best for you depends on your finances and ability to repay your balances going forward.