How to Settle Eviction Debt in Texas

From what we see, an open eviction balance is the hardest thing to get past in Texas rental screening. Settle it, even for less than the full amount, and your file often moves from the hardest group to one that’s much easier to place. Here’s how settling eviction debt with a former landlord or a collections agency usually works. It’s general information, not legal advice. Talk to legal aid about your own case before you pay or sign anything.

First: who actually owns the debt?

Your eviction balance is owed to one of two places:

The original landlord: the property management company or owner from your last lease. If the debt is still with them, you’ll deal with their billing team, and sometimes their legal department.

A collections agency: the landlord either hired an agency to collect for them or sold the debt to a debt buyer. Big debt buyers include LVNV Funding, Portfolio Recovery Associates and Midland Credit Management. If it was sold, the original landlord doesn’t own it anymore.

To figure out which:

• Check any recent letters or calls you’ve gotten
• Pull your credit report: collections accounts show the agency name
• Call or email your former landlord and ask

When the original landlord still has the debt

Debts the landlord still holds are usually harder to negotiate than collections. Still, from what we see, many landlords will take less than the full balance on a debt they haven’t sold yet. That’s more likely once it’s been sitting for a year or more.

A typical call goes like this:

1. Call their billing or accounting office
2. Tell them you know about the balance. If it’s close to 4 years old, don’t sign anything admitting you owe it until you’ve talked to legal aid. A signed note like that can keep an old debt alive (Civil Practice and Remedies Code § 16.065 (opens in new tab))
3. Explain you’re trying to rent a new place and want to settle
4. From what we see, offering 50% to 70% is a fair place to start. Expect a counter
5. Get any agreement in writing before paying. It should include:
   • The total you’ll pay
   • How the balance will be reported (ideally “paid in full” or “satisfied”)
   • When the reporting will update
   • That they’ll update any credit bureaus or screening companies they report to

Never pay by phone without the written agreement in hand.

When a collections agency has the debt

Debt buyers often pay pennies on the dollar for debts like yours. A 2013 FTC study (opens in new tab) found they paid about 4 cents per dollar on average, and less for older debt. So they’ve got a lot of room to settle, and two things show up again and again:

• Many debt buyers settle for well under the full balance
• The older the debt, the lower they tend to go

Here’s how it usually goes:

1. Call the collections agency
2. Don’t admit to the full debt or agree to any payment plan on the first call
3. Ask them for a “pay to delete” offer (many won’t, as we cover below)
4. Get the written offer before paying
5. Pay only after you have the settlement letter, and keep proof of every payment

Know the deadline: a Texas creditor usually has 4 years to sue you over a debt (Civil Practice and Remedies Code § 16.004 (opens in new tab)). Under Finance Code § 392.307 (opens in new tab), a debt buyer can’t sue you once that deadline passes. The same law says a payment or a promise to pay doesn’t bring the claim back.

A money judgment works differently. If the landlord already won one, they can collect on it for 10 years. The landlord can keep it alive longer by getting a new writ of execution, a court order to collect, within each 10 year period. If the landlord lets a judgment run out, they still have 2 years to bring it back (Civil Practice and Remedies Code §§ 34.001 and 31.006).

With an old debt or a judgment, talk to a lawyer or legal aid before you pay or sign anything. Our Texas tenant rights guide covers the rest of your protections after an eviction.

The “pay to delete” myth (mostly)

Some renters ask a collections agency to delete the collection account in return for paying. Many agencies won’t, and from what we’ve seen, only a few smaller ones will. Experian says accurate information can’t be removed, and a paid collection account stays on your report for seven years from the original late payment.

Keep one thing in mind, though. Deleting the collection account doesn’t remove the eviction filing from JP court records or from screening reports based on those records. All it removes is the collection on your credit report.

If a payment plan works better

Can’t pay a lump sum? Some landlords and many collections agencies will do a payment plan. To set one up:

• Offer a 6 to 12 month payment plan
• Get the plan in writing, including how the balance will be reported
• Ask if the balance will show as “in payment plan” until you’re done paying
• Ask if it will report as “paid in full” once you finish

One catch: some landlords will agree to a plan but keep reporting the balance as “unpaid” until you’ve paid it all.

After you settle: getting the update to show

Paid isn’t the same as updated. Your landlord or the collections agency can mark the balance “paid” long before your screening report catches up. From what we see, the update often takes 30 to 90 days.

To speed it up:

1. Keep copies of the settlement letter and your payment receipts
2. Ask the screening company for a copy of your report 30 to 45 days after you pay
3. If it hasn’t updated, file a dispute under the Fair Credit Reporting Act (FCRA) with the screening company and attach the settlement letter. See our dispute guide

When settling is worth the money

Here’s a rough example. You owe $2,000 and you’re looking at a $1,500 a month apartment. Say clearing the balance gets you a deposit that’s $500 lower and a risk fee that’s $200 lower. It might save you a guarantor fee too, which is often about one month’s rent ($1,500 here). That’s about $2,200 less at move in.

If you settled that $2,000 for $1,000 or so, the move in savings would more than cover it. Paying the full $2,000 comes out about even in this example, and it can open up a lot more properties.

When you can’t afford to settle

If you don’t have the cash to settle, here’s where we’d look:

• Properties that may approve renters with an open balance: our unpaid balance service
• Guarantor companies and similar services that back your lease (like Liberty Rent): our guarantor review
• Smaller private owners in your city

Ready to see how a settled balance can change your options? Fill out the form on our home page, and we’ll send you a short list of properties that may fit.

This guide is not legal advice. For questions about your own debt or collections account, talk to a Texas consumer rights attorney or a legal aid organization. TexasLawHelp.org can point you to the one that serves your county.