Collections

As a Texas resident, you can enjoy the rights afforded to you under Texas Law. Whether you are dealing with collection activities or credit reporting there is no doubt, if you live in Texas, you have protections unlike anywhere else in the U.S.

 

However, if a lawsuit has been filed against you, you should act quickly to protect your rights.  If you fail to file an answer in a pending lawsuit against you, the creditor may get a default judgment against you.  Once a creditor obtains a judgment against you, it may be able to collect in any of the following ways:

 

Bank Garnishment: In Texas, a judgment creditor can garnish your bank account whereby the judgment creditor can freeze and take the funds in your bank account to pay for the debt owed under the judgment.  Do not confuse this with a Wage Garnishment, which is not allowed in Texas, a Bank Garnishment can be done multiple times until the judgment is paid in full.

Cloud on Property Title: If you own a home, or other property in Texas a judgment can cloud title on your Homestead.  Though under the Texas Constitution, your homestead is protected from a forced sale, any other real property you own is not protected from a forced sale.  Furthermore, a judgment filed against your homestead can title to the property and cause problems should you want to sell or transfer ownership.

 

Seizure of “non-exempt” Property: Any property you own that is not exempt under Texas law, is subject to a writ of seizure by a judgment creditor.

 

Damage to your Credit Report:  Judgments in Texas are valid for 10 years and can be renewed for another 10 years with a writ of execution until the judgment creditor is paid in full.  The judgment is usually reported on your credit report as it is a public record and can be reported for as long as the judgment is valid.

Questions

What is the difference between federal collections and reporting law compared to Texas laws?

The federal laws that protect consumers from unscrupulous debt collectors or mistakes on your credit report are outlined in the Fair Debt Collection Practices Act. While the protections have made it much harder for debt collectors to abuse debtors, they still fall short.

Under Texas law, namely, the Texas Finance Code and the Texas Business & Commerce Code, debt collectors and credit reporting agencies are held to much stricter standards.

What types of protections do I have from debt collectors as a Texas resident?

There are a variety of guidelines that debt collectors must meet in order to collect an outstanding debt in Texas. These include, but are not limited to:

  • A debt collection company attempting to collect debt in Texas must be bonded and licensed to collect from consumers. Failure to maintain an active surety bond is grounds for an immediate cessation of collections and reporting to major credit bureaus.
  • A debt collector must validate of debt within 30 calendar days when requested to do so.
  • The debt collection agency must provide specific information about the debt including proof that the debt has been legally transferred to them by the original creditor, the original balance, the date of original default, and the date of debt transfer.
  • In addition, the debt collector must provide proof that you are, in fact, the debtor in question.
  • A collection agency must prove, with a contract signed by the debtor, that they have the authority to collect fees, interest or expenses above the original balance
  • A debt collection company cannot, under any circumstances, engage in threats, coercion, harassment, abuse, unfair, unconscionable means, fraud, deception or misleading representations to collect debt. Texas law outlines over forty (40) credit collection agency actions that are against the law.
  • A debt collection company that is unable to meet any provisions of the debt validation process within 30 days is legally obligated to permanently cease collections and remove the derogatory listing from your personal credit profile with national credit reporting bureaus.
  • A third party collection agency that violates any provision of Texas Finance Code is subject to criminal penalties through the Texas Attorney General, as well as civil penalties that include monetary awards to the victim.
What can I do to start taking advantage of my rights as a Texas resident?

Option 1: Learn Texas laws, namely the relevant provisions of Texas Finance Code and Texas Business & Commerce CodeIf you have been sued, you can begin representing yourself in litigation by researching the proper laws and procedural rules to follow to represent yourself pro se.

Option 2: Contact our office to retain an attorney. If you have been sued or are feel your rights are being violated, you can contact our office for further help, we’re happy to assist you.

You can take charge of your personal credit and your financial life.  We can help develop the best strategy based on your personal situation and implement a plan to protect your legal interests, minimize your financial impact, and put you back on the road to financial success.

 

Contact our office today.

Has the debt collector validated the debt in compliance with Texas statutes?

If you have received a debt collection call or letter in the mail from a debt collector, you have specific rights under Texas law.

By initiating a debt collection, the third-party debt collector must be able to prove that they are the legitimate owners of the debt, as well as to provide the alleged debtor with specific information regarding the debt.

How much time does a debt collector have to respond to my debt validation request?

The debt collection agency has thirty (30) calendar days to respond to a debt validation request.

What is a “debt validation” request?

All debt collectors operating in the State of Texas must be able to verify, or “validate,” any debt on which they are attempting to collect payment.

Texas Finance Code Section 392.202 requires a debt collection agency or credit bureau to provide the alleged debtor with specific information concerning their debt including but not limited to:

  • The name of the original creditor
  • The original date of default or non-payment of the debt
  • The date the debt was transferred from the original creditor to the third party debt collector
  • The original balance
  • The current balance
  • Surety bond information
I sent a debt validation request and the debt collector failed to respond or did not respond in time. What next?

If a debt collector has failed to respond to your debt validation request, then they have essentially admitted, per Texas Finance Code 392.202(b)(2), that the debt in question is inaccurate.

As such, all collection efforts on the debt must cease and any derogatory listing should be permanently removed from any consumer credit reports.

The debt collector has five (5) days after admission of inaccuracy of this debt to cease collections and remove credit bureau listings. Failure by a collection agency to meet this five (5) day deadline means that they have violated Texas Law and would subject the third party debt collector to civil and criminal penalties.

By taking legal action against collection agencies you can clean up your credit, stop collection violations, and restrict the transfer of the alleged debt to another collection agency.  Contact our office today to find out about what legal actions should be taken.

The third-party debt collector responded to my debt validation within 30 days. Is there anything else I can do?

It depends.

If the debt collector validated the debt properly then you should have received information specific to the alleged debt that would only be available to a debt collector who legitimately transferred the debt from the original creditor to themselves.

Because debt collectors often purchase debt for pennies on the dollar and en masse, they may not have all of the specific information pertaining to the debt. While they may have your name, social security number, original balance, and current balance, they may have failed to properly acquire additional paperwork regarding this debt, namely the underline contract signed by you authorizing the original credit line, interest, fees or other expenses.

In some cases, the debt collector may not be legally allowed to collect debt within the State of Texas, which immediately invalidates their collection claim.

Failure of the credit collection agency to provide this important information, even if they sent a response within thirty days, may allow you to continue to pursue the debt’s inaccuracy through legal means.

Our office knows how to pressure credit collection agency to ensure we protect your rights and settle claims in your favor as best we can.

If a debt collector has failed to respond to your debt validation request, then they have essentially admitted, per the Texas Finance Code 392.202(b)(2), that the debt in question is inaccurate. As such, all collection efforts on the debt must cease and any derogatory listing should be permanently removed from any consumer credit reports.

The debt collector has five (5) days after admission of inaccuracy of this debt to cease collections and remove credit bureau listings. Failure by a collection agency to meet this five (5) day deadline means that they have violated Texas Law and would subject the third party debt collector to civil and criminal penalties.

 

Contact our office for further information.  

For more information contact me to schedule a consultation

Phone: 940-230-2377
Fax: 940-230-2377
1332 Teasley Lane Suite 150
Denton, TX 76028