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Houston Creditors' Rights Law Blog

Payment plans and your creditors' rights

Many consumers seem to be under the impression that they are in control of everything related to their debt, especially when it comes to paying it back. Some even try to push for specific payment plans that are unreasonable or simply not in line with reality. Texas creditors might feel pressured to accept these types of plans in hopes of recovering at least some of their money, but they do not have to. Creditors' rights protect debt collectors in these types of situations.

For example, it is not all that uncommon for a debtor to try and negotiate a new payment plan. These plans often involve lower monthly payments, interest rates and even total balances. But collection agencies do not have any legal obligation to accept any type of payment plan. Even agreeing to a payment plan is not necessarily the end of the road, as collection agencies can still change their minds and decide to sue for any unpaid debt.

Creditors' rights during bankruptcy

Bankruptcy might help overwhelmed consumers dig themselves out of the debt they buried themselves in, but it puts Texas creditors just like you in compromising positions. If your debtor filed for bankruptcy, you will face an uphill battle to secure payment. You could even end up getting lost in a long line of creditors who are also fighting for payment. Here are a few things to you should know about your creditors' rights when dealing with a debtor who has filed for bankruptcy.

There are two main types of consumer bankruptcy -- Chapter 7 and Chapter 11. When a debtor files for bankruptcy, an automatic stay is implemented that prevents creditors from seeking repayment. This is just the first step in a longer process.

Understanding your creditors' rights for collecting debt

There is nothing wrong with wanting to recover an unpaid debt, but doing so can be difficult. Some debtors try to vilify Texas businesses who are just trying to collect payment for services or other debts. This can make creditors second-guess themselves or feel as if they have no options, so it is important to have a firm understanding of creditors' rights.

A creditor has the right to directly contact a debtor to ask for payment without having to go through the courts. Most creditors do not have to abide by the Fair Debt Collection Practices Act -- the FDCPA -- which limits where, when and how debt collection agencies can contact debtors. The FDCPA does not apply to individual creditors who are trying to collect their own debts. But if a creditor transfers that debt to a debt collection agency, and that agency violates the FDCPA, the debtor can try and recover damages.

"Creditors have better memories than debtors." ~ Benjamin Franklin

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