It is important for debtors and creditors to understand that there is a law called the Fair Debt Collection Practices Act, which governs debt collection practices. Under the FDCPA, there are some ground rules that debt collectors must follow. The act forbids debt collection companies from using unfair or deceptive practices to collect debts from debtors.
Texas debtors often default on their repayment plans due to financial duress. Collection agencies have the legal right to initiate collection cases in order to be paid monies owed. Debtors who are overwhelmed by their indebtedness may have the legal right to declare bankruptcy.
In a case where a debtor consistently fails to pay off debts, the creditor may be forced to initiate a lawsuit against the debtor. However, the creditor's rights will never be considered more important than the debtor's rights. Texas laws ensure that the debtor is protected and such debtors often benefit from consulting attorneys as well as financial experts to help them understand the various aspects of such default in the loan repayment.
The fate of Dallas, Texas-based Energy Future Holdings, which filed for bankruptcy in April this year, has become uncertain once again. With two loans already approved by a bankruptcy court, the company was on the verge of finalizing a plan to restructure its debt and thus get closer to emerging out of bankruptcy. The approval of a third loan would have made this process a certainty. But opposition from some creditors, who felt the plan gave higher preference to other lenders, has forced the company to think of alternatives.
The Consumer Financial Protection Bureau was only created in 2011, but it’s already making enormous strides. In fact, the agency is currently considering new rules meant to strengthen the Fair Debt Collection Practices Act, for FDCPA. This federal law was passed in 1977 to protect debtors from unfair debt-collection activities but, amazingly, this is the first time a specific regulator has been in charge of its interpretation.