Sell Your Note to Pay Off Debt in Texas — Do It Now

Debt has a way of taking over your financial life. The monthly payments, the interest charges, the stress of watching balances that seem to barely move no matter how much you pay — it all adds up to a burden that weighs on your decisions, your sleep, and your sense of financial freedom. If you are carrying significant debt and you also hold a promissory note secured by Texas real estate, you are sitting on the solution. That note can be converted into a lump sum of cash that wipes out your debt in a single stroke, and the financial math almost always works in your favor when you run the numbers.

The logic is straightforward. Your note generates income at a fixed rate — say 7 or 8 percent. Your debt costs you money at rates that are often much higher — credit cards at 20 to 28 percent, personal loans at 10 to 15 percent, medical debt with late fees and collection costs, or tax obligations with penalties and interest that compound relentlessly. Every month you hold the note while carrying high-interest debt, you are earning 7 percent on one hand and paying 20 percent on the other. That is a losing trade, and selling the note to eliminate the debt flips the equation in your favor immediately.

This guide makes the case for selling your note to pay off debt, walks you through the financial analysis, and shows you how to execute the strategy quickly and efficiently. If debt is weighing you down and you have a note that could set you free, this might be the most important financial decision you make this year.

The Financial Case for Selling Your Note to Eliminate Debt

At its core, this strategy is about interest rate arbitrage — using the proceeds from a lower-yielding asset to eliminate a higher-cost liability. The math is compelling in almost every scenario where high-interest debt is involved.

The Interest Rate Gap

Consider the typical interest rates involved. Your promissory note probably earns between 6 and 12 percent interest. Your credit card debt costs between 20 and 28 percent. A personal loan might cost 10 to 18 percent. Medical debt in collections often carries fees that push the effective cost even higher. IRS tax debt accrues penalties and interest at combined rates that can exceed 10 percent annually.

When you sell your note, you take a discount — typically 10 to 30 percent for a performing note, depending on its characteristics. That discount is the cost of converting future income into present cash. But compare that one-time cost to the ongoing cost of your debt. A 20 percent discount on a note sale is a one-time event. A 24 percent credit card interest rate is an annual event that compounds month after month, year after year. Over any reasonable time horizon, eliminating the high-interest debt produces a far better financial outcome than holding the note and continuing to make minimum debt payments.

A Concrete Example

Suppose you hold a note with a $80,000 remaining balance earning 8 percent interest, generating approximately $670 per month. You also carry $45,000 in combined debt: $25,000 on credit cards at 22 percent average interest, $12,000 on a personal loan at 14 percent, and $8,000 in medical bills with collection fees accruing.

A note buyer offers you $65,000 for the note — an approximately 19 percent discount. You use the $65,000 to pay off all $45,000 in debt and have $20,000 left over for savings or investment. The debt is gone. The monthly payments you were making on the debt — probably $1,200 to $1,500 per month minimum — are now free cash flow. The interest you were paying — approximately $7,000 to $8,000 per year on the credit cards alone — stops immediately.

Yes, you gave up the $670 monthly note payment. But you eliminated $1,200 to $1,500 in monthly debt payments, which means your net monthly cash flow improves by $530 to $830 per month. And the $20,000 you have left over can be invested, saved, or used as an emergency fund. The financial improvement is immediate, substantial, and permanent.

Types of Debt Where This Strategy Makes the Most Sense

While selling a note to pay off debt works in many scenarios, it is most compelling when the debt carries high interest rates, growing balances, or severe consequences for non-payment.

Credit Card Debt

Credit cards are the most obvious target. With interest rates commonly between 20 and 28 percent and minimum payments designed to keep you in debt for decades, credit card balances are among the most expensive forms of borrowing available. Eliminating credit card debt with note sale proceeds saves thousands of dollars per year in interest and frees up significant monthly cash flow.

Tax Debt

IRS and state tax obligations carry penalties and interest that compound aggressively. The IRS charges a failure-to-pay penalty of 0.5 percent per month plus interest at the federal short-term rate plus 3 percent. These charges are applied monthly and compounded, meaning your tax debt grows even while you are making payments. Worse, tax liens can attach to your property, garnish your wages, and damage your credit. Paying off tax debt quickly stops the bleeding and removes the threat of enforcement actions.

Medical Debt

Medical debt often starts at zero interest but can escalate rapidly once it goes to collections. Collection agencies add fees, report to credit bureaus, and can pursue lawsuits and wage garnishments. Even medical debt that is not yet in collections creates stress and can complicate your financial life in unexpected ways. Using note sale proceeds to clear medical debt removes the uncertainty and the risk of escalation.

Personal Loans and Lines of Credit

Personal loans at 10 to 18 percent and home equity lines with variable rates that may be climbing are good candidates for payoff. Eliminating these monthly payments improves your cash flow and reduces your overall financial risk, particularly for variable-rate obligations that could become more expensive over time.

Judgment Debts

If you have an outstanding court judgment against you, the creditor can pursue collection through asset liens, bank account levies, and wage garnishment. Satisfying the judgment with note sale proceeds eliminates the legal exposure and the stress of potential enforcement.

Beyond the Numbers: The Non-Financial Benefits of Becoming Debt-Free

The financial case for selling your note to pay off debt is strong, but the non-financial benefits may be even more valuable.

Stress Reduction

Debt is one of the leading causes of stress, anxiety, and relationship conflict. The weight of owing money — the constant calculations, the collection calls, the feeling of being trapped — takes a real toll on mental health and quality of life. Becoming debt-free provides a sense of relief and freedom that is difficult to quantify but impossible to overstate.

Improved Credit Score

Paying off revolving debt like credit cards dramatically improves your credit utilization ratio, which is one of the most influential factors in your credit score. A higher credit score means better terms on future borrowing, lower insurance premiums, and improved access to financial products and services.

Financial Flexibility

Without monthly debt payments consuming your income, you have the flexibility to save, invest, handle unexpected expenses, and pursue opportunities that were previously out of reach. The monthly cash flow that was going to creditors now goes to building wealth rather than servicing debt.

Better Decision-Making

Debt distorts financial decision-making. When you are under financial pressure, you are more likely to make short-term, fear-based decisions rather than strategic, long-term ones. Eliminating debt clears the mental space for better financial thinking and positions you to make decisions from a place of strength rather than desperation.

Overcoming the Hesitation: Why People Delay and Why They Shouldn't

If selling your note to pay off debt makes so much financial sense, why do so many people hesitate? Understanding the common reasons for delay helps you overcome them.

"I Don't Want to Take a Discount"

The discount on a note sale feels like losing money. But compare it to what you are actually losing by holding the note while carrying high-interest debt. If your credit card interest is $500 per month and the discount on the note sale is $15,000, the discount pays for itself in 30 months of eliminated interest. After that, every month is pure savings. The discount is a one-time cost that stops a recurring loss. For a deeper understanding of how discounts work, see this explanation of discounts when selling a note in Texas.

"I Like the Monthly Income"

The monthly note payment is nice, but it is being offset — often more than offset — by the monthly debt payments going in the other direction. Your net monthly position after eliminating the debt is almost certainly better than your current position of receiving note income while making debt payments. Run the actual numbers and you will see.

"What If I Need the Income Later?"

This is a valid concern, but it assumes that the note income will be there when you need it. What if the borrower defaults? What if you need a lump sum for an emergency that monthly payments cannot cover? The note income is not guaranteed, and it is not flexible. Cash from the note sale, once your debts are paid, can be invested, saved, and accessed whenever you need it — a more flexible and reliable safety net than a stream of payments from a single borrower.

"I'll Deal With It Later"

Every month you wait, your debt costs you more in interest, your note depreciates slightly as the borrower pays it down, and the opportunity to act slips further away. There is no financial advantage to waiting. The best time to sell your note and eliminate your debt is today.

How to Execute the Strategy

If you are ready to move forward, the process is straightforward and can be completed in as little as two to three weeks.

Step 1: Total Up Your Debts

Create a complete list of every debt you want to eliminate: the creditor, the balance, the interest rate, the minimum monthly payment, and any penalties or fees that are accruing. This gives you a clear target for the note sale proceeds.

Step 2: Get a Cash Offer on Your Note

Contact Longhorn Note Buyers at (210) 828-3573 or visit longhornnotebuyers.com to get a cash offer within 24 hours. Provide the basic details of your note: remaining balance, interest rate, monthly payment, remaining term, payment history, and property information. The offer tells you exactly how much cash you can access.

Step 3: Run the Comparison

Compare the note sale proceeds to your total debt. If the proceeds exceed your debt, you can pay everything off and have cash left over. If the proceeds are less than your total debt, prioritize paying off the highest-interest obligations first and use any remaining cash to make a significant dent in the rest. For guidance on how note pricing works, see this overview of what determines note value in Texas.

Step 4: Accept and Close

If the numbers work, accept the offer and begin the closing process. Due diligence takes two to three weeks, and the funds are wired to your account upon closing. As soon as the funds arrive, pay off your debts. For a detailed walkthrough of the selling process, see this step-by-step guide to selling a note in Texas.

Step 5: Build on Your Debt-Free Foundation

Once the debts are paid, redirect the money you were spending on monthly debt payments into savings, investments, or an emergency fund. The monthly cash flow improvement from eliminating debt is your opportunity to build real financial security. Do not let it slip away by accumulating new debt.

Partial Sale Option: Pay Off the Worst Debts First

If you do not want to sell your entire note, a partial sale can generate enough cash to eliminate your highest-interest debts while preserving some of the note's income stream.

For example, if your worst debt is $25,000 in credit cards at 22 percent, you might sell enough note payments to generate $28,000 — enough to pay off the cards and cover the associated costs. You keep the remaining note payments for ongoing income and eliminate the debt that was costing you the most.

Partial sales typically carry a more favorable percentage discount than full sales, so you are converting payments to cash at a better rate. If your debt situation is concentrated in one or two high-interest obligations, a partial sale may be the most efficient approach. For a comparison of full and partial options, see this analysis of full vs. partial note sales.

Why Longhorn Note Buyers for Debt-Elimination Sales

Longhorn Note Buyers has helped countless Texas note holders convert their notes into cash for debt elimination. They understand the urgency that debt creates and are committed to moving quickly — 24-hour offers, two-to-four-week closings, and no games or delays.

With over $47 million in notes purchased, an A+ BBB rating, and a 100 percent close rate, Longhorn provides the reliability you need when the goal is to get cash in hand and debts paid off as fast as possible. Their pricing is fair and transparent, with no hidden fees or last-minute surprises. The number they quote is the number you receive at closing.

Ready to Sell Your Note?

If you are carrying debt and holding a promissory note in Texas, you have the power to change your financial situation right now. Contact Longhorn Note Buyers today at (210) 828-3573 or visit longhornnotebuyers.com to get your free, no-obligation cash offer within 24 hours. Stop paying interest on debt that a single phone call could eliminate. The sooner you act, the sooner you are debt-free.

Frequently Asked Questions

Is it really worth taking a discount on my note to pay off debt?

In most cases involving high-interest debt, yes. The discount on the note sale is a one-time cost, while the interest on your debt is an ongoing, compounding expense. If you are paying 20 percent or more on credit card debt and taking a 15 to 20 percent discount on your note sale, the discount pays for itself within a year or two through eliminated interest charges. After that, every month is pure savings.

What if my note proceeds are not enough to pay off all my debt?

Use the proceeds to pay off the highest-interest debts first — typically credit cards and any debt in collections. Then use the monthly cash flow you freed up by eliminating those payments to accelerate payoff of the remaining obligations. Even a partial debt elimination significantly improves your financial position by reducing your monthly interest burden and freeing up cash flow.

Will selling my note affect my credit score?

Selling a promissory note is not a borrowing transaction and does not appear on your credit report. However, using the proceeds to pay off credit card debt and other obligations will likely improve your credit score significantly by reducing your credit utilization ratio and eliminating delinquent accounts.

Can I negotiate with my creditors while the note sale is in process?

Yes. Some creditors will accept a lump sum settlement for less than the full balance owed, particularly on accounts that are delinquent or in collections. If you can negotiate settlements at a discount, your note sale proceeds will go even further. Just make sure any settlement agreement is in writing before you send payment, and get confirmation that the settled account will be reported as paid or satisfied to the credit bureaus.

What if I get into debt again after selling my note?

Selling your note provides a one-time opportunity to reset your financial situation. To make the most of it, commit to living within your means after the debt is paid. Build an emergency fund to handle unexpected expenses without resorting to credit. Create a budget that prioritizes savings. The freedom from debt is valuable — protect it by changing the financial habits that created the debt in the first place.