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Fair Debt Collection Practices Act Even Fairer in Texas

By (view all posts by Angie_P)
at 10:56AM Friday July 15, 2011
under Personal Finance

If you have unresolved credit card debt, there's never been a better time to be a Texan. Home of the Alamo and some of the most secure debt collection laws in the country, Texas does all that it can to protect its residents from harassment by credit card companies and third party collection agencies. On top of federal laws like the Fair Debt Collection Practices Act, Texas imposes its own set of laws to ensure debtors are treated fairly and only held responsible for legitimate debts. The state provides solid protection for those with debt accumulated on Texas credit cards.

In Texas, the "statute of limitations," or maximum time after an event that a creditor can sue you, for credit card debt is 4 years, meaning any debts older than that are off limits to creditors. But, since the statute of limitations begins on the day of your last payment, any recent payments made on an old debt reset the 4-year time limit, giving credit card companies and collection agencies the green light to go after you. 

One of your initial fears may be whether or not creditors will garnish your wages, or collect money directly from your earnings or salary. Though most states allow up to 25% of a debtor's weekly disposable earnings to be garnished, Texas doesn't allow creditors to garnish any wages except in cases involving child support, defaulted student loans and back taxes. 

Not only are your wages safe, but creditors also can't take your car or your house, or place a lien on it (as long as it is declared a homestead). As long as you haven't filed for bankruptcy, the only way creditors can legally get you is through your bank accounts, if they find them. And believe us--they'll find 'em.

Creditors want a makeover

According to the New York Times, debt collection agencies are trying to change their image from heartless, money hunters to hardworking men and women just doing their job. ACA International, the trade association representing collection agencies, is hoping to change several laws and regulations in an attempt to ensure a civil interaction between creditors and consumers, and prevent any inappropriate language or behavior from either party.  

In addition to requiring collectors to track a consumer's account information for at least seven years, they're lobbying for the ability to contact consumers by email or cell phone, and to leave voicemails with specific, predetermined language. This has been a serious concern for consumers since third parties could easily track and view these messages, but proves to be a necessary update in order to keep up with the rapid changes in technology. 

Next month, the FTC will team up with the Consumer Financial Protection Bureau, a branch able to write or revise rules and regulations, to supervise debt collectors. ACA International pledged to crack down on any debt collectors who break the new rules, and agrees that the success of the new provisions relies heavily on customer satisfaction. 

Choose your weapon

If you're being bombarded with phone calls and threats of repossession, you have the grounds to report them for harassment in violation of the FDCPA. Filing this illegal behavior could stick creditors with a fine of $100-$500 per violation. You need only contact the state Attorney General with the name of the agency, their address and phone number, and the name of the debt collector you spoke to. 

Bank credit cards are more lenient than you'd expect. The card companies will be more willing to negotiate the amount of debt owed rather than pursue it in court because of these strict protection laws. They're also willing to help you out if you're bankrupt, because while they may lose out in a debt settlement, they'll get less if you declare bankruptcy.

An expired statute of limitations doesn't prevent you from being sued, but you can use it as grounds to dismiss the case. If you receive a court summons, you should never ignore it. Get an attorney who is well versed in credit card debt laws, and use the collected evidence to win your case.

There's a reason they say, "Don't mess with Texas."

Angie Picardo is a staff writer for NerdWallet, a credit card website dedicated to helping consumers find the best credit cards.