The Federal Debt Collection Practices Act (FDCPA) sets strict federal guidelines that apply to any professional debt collector attempting to collect a third party debt in the United States. These regulations were put into place in order to protect consumers from predatory collectors who attempt to obtain payment through threats of violence or by misrepresenting themselves.
However, the FDCPA does not apply to private businesses attempting to collect outstanding debts from their clients or customers. Many states leave these types of collections outside the regulations that are required of commercial debt collectors. Texas is not one of those states.
The Texas Debt Collection Act
While the FDCPA applies only to professional debt collectors, the Texas Debt Collection Act applies to anyone attempting to collect a commercial debt of any kind. This means that in any situation where you are attempting to collect a consumer debt for any reason, you must adhere to the regulations set forth by the state of Texas.
Threats & Abuse
While the regulations described by the Texas Debt Collection Act apply to anyone attempting to collect a debt in the state of Texas, most of the regulations are perfectly reasonable and easy to follow for anyone who is operating their business in a professional manner in the first place.
Debt collectors are prohibited from making any type of threats towards debtors. They are also prohibited from misrepresenting themselves in any way to the debtor. They must specifically identify who they are, why they are contacting the debtor, and provide specific details about the debt.
When it comes to fees, the Texas Debt Collection Act makes it illegal to demand payment for more than the amount that was originally agreed upon, and that agreement does not necessarily have to be a written agreement. However, an increase in the amount owed can be permitted if it accounts for fees required to track down the debtor or obtain payment.
The Texas Debt Collection Act also states that any dispute about a debt must be made in writing. After a formal dispute is filed, the debt collector has 30 days to determine and prove whether or not the dispute is valid. If after 30 days the collector is unable to do so, the dispute is upheld.
Property & Wages
Another interesting aspect concerning debt collection in Texas is that any residence that has been designated as a homestead is not available to settle any type of debt except for a debt specifically involving the property such as a mortgage or home equity loan.
It is also illegal to garnish wages in order to settle a debt in the state of Texas. The only exceptions for this are to settle child support, back taxes, or student loan debts.
Debt collection is a difficult task regardless of where it is being conducted, but there are a number of added layers that make debt collection in Texas and even more difficult nut to crack. Because you are going to have to follow the same regulations as any commercial debt collector, it is almost always better to hire a professional to handle the situation for you in Texas.