Texas Debt Collection Laws

The complexity of debt collection practices is continuously increasing with the ascending number of Americans in debt. The federal government passed The Fair Debt Collection Practices Act and the Fair Credit Reporting Act in 1978, but hundreds of additional laws have been created by various state governments to increase the effectiveness of these laws. They are imposed to hinder unfair collection practices and guide all related debt practices.

Debt Collection in Texas

Any third-party debt collectors in Texas, individual or business, must gain a surety bond of $10,000 to legally engage in loaning. It also must be filed with the Texas Secretary of State office. Although Texas law follows closely to the federal outlines of The Fair Debt Collection Practices Act and the Fair Credit Reporting Act, there are several important distinctions in Title 5 of Texas law code, Protection of Consumers of Financial Services. The interest rates in Texas are also unique, at a maximum of 6% and a judgment rate at the lower of 18% or the contracted rate. In addition, there is no specified usury rate by Texas state law.

Texas Statute of Limitations

When violations of law are proposed against another individual or business, each specific type of infraction carries a time limit for bringing the charges to court. These are called statutes of limitations. When dealing with debt related charges there are a few distinctions to note. Limits apply to the place of contract negotiation not residency of either party. The time period begins not with the final completed payment, but with the first incomplete payment. These limits in Texas are simple:

• 4 years: Promissory notes
• 4 years: Open accounts (credit cards)
• 4 years: Oral agreements
• 4 years: Written Contracts

Collections Practices and Rules for Texas

Differing from the federal regulations, Texas allows no wage garnishment. However, non-wage incomes, such as bank accounts, rents, and loyalties may be garnished post-judgment. Collectors who admit to inaccurate charges have five days to correct the problem, and have 30 days after the charges to admit or deny. In Texas, violations to debt collection law of either Texas of federal guidelines are punishable by fines lower than the federal limits of $100 to $500 for each violation, in addition to a misdemeanor charge. Personal debts judged in civil suits incur penalties of at least $100 and attorney fees.

Legal

• Direct communication with a debtor between the hours of 8:00AM and 9:00PM.
• Communication through a debtor's employer, only when other methods have failed
• Additional charges to debt because of legal fees, unless otherwise voided by a written contract

Illegal

• Garnishment of child support or social security
• Sale of, or threats to the sale of a debtor's obligation to a third party
• Seizure or repossession of a debtor's property without court proceedings

Laws for Debt Harassment in Texas

Adding to federal regulations for the protection of debtors through their state code of laws, Texas provides very strong defense against overly aggressive debt collectors. Harassment violations according to either Texas or federal law are treated with the same penalties of other debt collection infractions. These laws provide protection from creditors in Texas and warrant penalties of $100 to $500, compounding with each specific violation, and compensation for attorney fees.

Texas Debt Negotiation and Settlement Rules

The unique process of debt negotiation and settlement is governed by all the same financial laws that apply to the initial contract creation. In essence, a new contract is created. Generally, it will entail one or more lump sum payments with possible continued payments at a reduced rate, depending on the lump sum values. There are many debt settlement companies, but they can be insecure, costing the debtor much more in the end. Usually direct negotiation with the lender is possible and more effective, especially with assistance from a legal professional. The flexibility of renegotiations can even allow for payment deferrals, making this process very useful for a number of reasons:

• Unique financial outlooks can be accounted for
• Removes the risk of possible suit against the debtor
• Major tension reduction from no longer pending debts.

Help from a Texas Debt Collection Attorney

In many situations, debt settlement lawyers are vital to the success of debt negotiations and settlements. Because of the intricacies involved in contract, many debtors can be overwhelmed by the situation and process as a whole, especially when a debt collector is actively pursuing the debtor with reminders. These specialized lawyers are proficient in assessing financial situations to find the best possible choices for negotiations, settlements or lawsuits in the case of debt harassment or other illegal debt collection practices that a debtor may have missed. In addition, once hired, these lawyers become the mediators between creditor and debtor, making direct communications to the debtor grounds for possible debt harassment.