Know the debt collection laws in Texas

Understanding the Federal Fair Debt Collection Practices Act and the Texas Debt Collection Act: A Guide for Creditors

For over 25 years, I represented debtors, filing over 4,000 Chapter 7 and Chapter 13 bankruptcy cases. Now, as an attorney focusing on creditor representation, I understand the importance of navigating both federal and state laws to ensure creditors receive what they are owed. Two critical pieces of legislation—The Federal Fair Debt Collection Practices Act (FDCPA) and The Texas Debt Collection Act (TDCA)—protect consumers from unfair debt collection practices but also establish clear guidelines for creditors and debt collectors operating in Texas.

Key Provisions of the Federal Fair Debt Collection Practices Act (FDCPA) and Texas Debt Collection Act (TDCA)

Both the FDCPA and TDCA aim to protect consumers from harassment and abusive debt collection practices. However, the Texas Debt Collection Act goes a step further by regulating debt collection within the state, providing additional protections for consumers and further clarifying rules for debt collectors.

Both Acts prohibit the following practices:

1. Calls at Work: Debt collectors cannot contact consumers at work if they know or should know that the employer prohibits such calls.
2. Inappropriate Hours: Debt collectors are prohibited from contacting debtors before 8 AM or after 9 PM unless they are aware that these times are convenient for the debtor.
3. Unfair Collection Practices: Both Acts prohibit debt collectors from using unfair or deceptive means to collect debts.
4. Harassment: Any form of harassment, abuse, or oppression is strictly prohibited.

Texas-Specific Debt Collection Regulations

While the FDCPA provides federal guidelines, the Texas Debt Collection Act further establishes specific rules that debt collectors must follow in the state of Texas, including:

• Licensing and Bonding: Any debt collection company operating in Texas must be bonded and licensed. Failure to maintain a valid surety bond results in immediate cessation of collection activities and may lead to a report to major credit bureaus.
• Debt Validation: Debt collectors must validate a debt within 30 days of the initial request or the instruction to collect from the debtor. This is in accordance with Texas Finance Code Section 392.202, and it requires debt collectors to provide detailed information about the debt, such as:
  1. Name of the original creditor
  2. Original date of default
  3. Date the debt was transferred to the third-party collector
  4. The original balance
  5. Current balance
  6. Surety bond information
• Failure to Validate Debt: If a debt collector fails to validate the debt within 30 days, they are considered to have admitted the debt is inaccurate. They must cease all collection activities and remove any negative listings from the debtor’s credit report within 5 days. Failure to meet this deadline means the debt collector is in violation of Texas debt collection laws and may face civil and criminal penalties.
• Proof of Debtor Identity: Debt collectors must provide proof that the individual they are attempting to collect from is indeed the debtor in question. Without proper verification, they cannot legally proceed with debt collection.
• Civil and Criminal Penalties for Violations: Debt collectors who violate any part of the Texas Finance Code may face significant penalties, including monetary compensation to the debtor. This could include the potential for damages or other compensation for the victim of improper collection practices.
• Collection of Fees and Interest: Debt collectors must have clear evidence that they are authorized to collect fees, interest, or other charges above the original debt. This proof is often required in the form of a signed agreement from the debtor.

How These Laws Affect Creditors

As a creditor in Texas, it’s important to understand both your rights and the responsibilities of debt collectors who are hired to recover debts. The FDCPA and TDCA set clear guidelines for what debt collectors can and cannot do. While these laws protect consumers, they also ensure that debt collectors operate within the law, ultimately leading to fair and transparent collection processes.

For creditors, ensuring that debt collectors comply with these laws can mean the difference between a successful debt recovery and costly legal complications. If you’re looking to recover what you’re owed from debtors in Texas, having an experienced attorney who understands both federal and state debt collection laws is crucial.

Get the Help You Need to Recover What You’re Owed

With over 25 years of experience representing debtors in bankruptcy cases, I now focus on helping creditors recover what they are rightfully owed. I am familiar with the legal landscape surrounding debt collection in Texas and can ensure that your collection efforts comply with all applicable laws.

If you’re facing challenges collecting from Texas debtors, contact me today to discuss your options and learn how I can help you navigate the complexities of debt recovery.