Debt Collection Laws in Texas

Commercial vs. consumer debt collection laws in Texas

Understanding the difference between consumer and commercial debt is key to understanding your legal protections. Consumer debt refers to money owed for personal, family or household purposes, such as credit cards, medical bills, auto loans or personal loans. Commercial debt is tied to business activity, including vendor accounts, business loans or lines of credit.

Consumer debt is protected under both federal and state laws. Commercial debt protections are more limited, and business owners may not receive the same safeguards as individual consumers.

If you’re dealing with commercial debt, your options may include negotiating directly with creditors, reviewing contract terms or seeking legal advice. Business owners should pay close attention to collection communications and documentation, as disputes often depend on contract details rather than consumer protection laws.

Federal debt collection laws

The Fair Debt Collection Practices Act (FDCPA) is a federal debt collection law that affords all Americans certain rights when unpaid debts are being pursued by bill collectors.

This act prohibits debt collectors from using deceptive or abusive debt collection practices, such as contacting you at odd hours, calling you repeatedly or making false threats regarding legal actions they plan to take. Debt collectors are also barred from revealing the existence of unpaid debts to other parties, both on social media and through direct forms of communication.

According to the Consumer Financial Protection Bureau (CFPB), the FDCPA requires debt collectors to contact your attorney instead of reaching out to you personally if you already have legal representation in place.

Also note that the FDCPA lets you stop all contact with debt collectors by informing them in writing that you do not want to receive communications any longer. If the debt collector continues its communications, you can sue them under the FDCPA and receive coverage of your legal fees as well as damages.

» MORE: How to handle bill collectors

Texas debt collection laws

Debt collectors in Texas are legally required to comply with the FDCPA, but they must also follow Texas debt collection law under the state’s Finance Code.

While the FDCPA only applies to debt collectors working with a debt collection agency and attorneys hired to collect unpaid debts, the Texas debt collection law applies to "any person who regularly attempts to collect debts owed to themselves or others." The Texas Office of Consumer Credit Commissioner says this also applies to attorneys who collect debt on a regular basis.

While many rules outlined in the Texas debt collection law mirror those afforded under the FDCPA, the state law offers consumers another layer of protection.

Debt collection practices

Under Texas debt collection law, bill collectors are outlawed from doing any of the following (among other acts):

• Threatening violence or other criminal acts
• Using profane or obscene language to collect on a debt
• Falsely accusing you of fraud or other crimes
• Threatening to arrest you or seize your assets without court action
• Using the telephone to harass you
• Making collect telephone calls without disclosing their name and identity
• Failing to identify themselves or falsely identifying themselves
• Making false claims about the amount of debt owed or where the collection process is within the legal system
• Sending documents that look like they are from a court or government agency
• Trying to collect more than the amount owed, even after taking fees and additional interest charges into account
• Calling you before 8 a.m. or after 9 p.m. without your permission
• Contacting you instead of your attorney when they already know you have legal representation
• Giving false information about you to anyone else, including the credit bureaus

Required notices to debtors

Within five days of initial contact, debt collectors are required to send written information to you about your unpaid debts. This written notice must include the amount of money owed, the name of the creditor to whom the money is owed, the contact information of the debt collector and actions you can take if you believe you do not owe the money.

Consumer rights

Texas consumers have the right to dispute debts they are contacted about within 30 days of receiving initial notice. If you dispute the debt in writing, the debt collector can no longer contact you unless they send proof of the debt. This proof could be a copy of the original bill for the amount owed, a copy of an original invoice or other proof of the debt.

As mentioned, you can also stop all debt collection calls and activities by telling bill collectors in writing that you want contact to stop. This doesn't mean you no longer owe the debt, but it can put an end to the constant phone calls and attempts to collect unpaid amounts.

Statute of limitations

Debt collectors in Texas have a limited amount of time they can sue in court for repayment of a debt. This time limit is called the statute of limitations, and it is set at four years for all types of debt.

This does not mean bill collectors can no longer pursue the debt or try to get repaid, nor does it mean you no longer owe the money. The Texas statute of limitations on debt only limits how long debt collectors can sue in court for unpaid amounts.

Licensing and registration

According to the Texas Secretary of State, third-party debt collectors and credit bureaus must file a $10,000 surety bond before they can engage in debt collection activities. However, the state does not license debt collection agencies.

Enforcement and penalties

Individuals who feel their federal rights have been violated under the FDCPA can take debt collectors to court within one year of the violation. In that case, it's possible to be awarded up to $1,000 in damages plus additional harm caused through lost wages and legal fees. Debt collectors may also be required to pay legal fees for both sides of the case.

On the state level, debt collectors who violate Texas debt collection law can be subject to criminal and civil penalties. Texas residents can sue bill collectors for damages and injunctions under Texas debt collection law as well. Also note that engaging in debt collection activity without filing a bond with the secretary of state may also be a criminal offense.

Texas residents who feel their rights have been violated can and should file a complaint with the state attorney general.

» MORE: How to get out of debt

What should you do if a debt collector sues you in Texas?

If a debt collector files a lawsuit against you in Texas, act quickly to protect your rights and avoid a default judgment.

• Review the citation and petition: These documents explain who is suing you, how much is claimed and why.
• Track your deadline: In Texas, you typically must file an answer by 10 a.m. on the Monday following 20 days after service. Missing this deadline can result in an automatic judgment.
• File an answer: Respond to the claims by admitting, denying or stating you lack enough information. Filing an answer preserves your right to defend yourself.
• Check for errors: Confirm the amount owed, the creditor’s identity and whether the debt is within the statute of limitations.
• Consider legal help: A consumer attorney or legal aid organization can help you understand your options and defenses.
• Prepare for court or settlement: Gather records, explore settlement options and attend all hearings.

Taking these steps early can improve your chances of resolving the case on fair terms.

FAQ

Bottom line

Texas residents have plenty of rights and protections when it comes to debt collection activity. These include the right to tell debt collectors to stop contacting you immediately, which can put an end to the ceaseless phone calls and stress that constant contact from debt collectors can cause.

That said, running from debt or telling debt collectors to stop calling won't make debt go away. If you're struggling with debt in Texas and you can't seem to dig your way out, it may be time to contact a debt collection attorney or credit counseling agency that can help.