This text has undergone thorough fact-checking to ensure accuracy and reliability. All information presented is backed by verified sources and reputable data. By adhering to stringent fact-checking standards, we aim to provide you with reliable and trustworthy content. You can trust the information presented here to make informed decisions with confidence.
Debt collection in Texas is heavily regulated, making it one of the most consumer-protective states in the U.S. Here's what you need to know:
Modern tools like AI and compliance automation are helping agencies navigate strict rules while maintaining ethical practices. Consumers and businesses alike should verify agency compliance using Texas's "Debt Collector Search" tool.
Texas Debt Collection Laws: TDCA vs FDCPA Comparison Chart
Debt collection agencies working in Texas must follow both state and federal laws, which set strict rules on how they can pursue unpaid debts. Let’s break down the key regulations shaping these practices.
The Texas Debt Collection Act (TDCA), found in Finance Code Chapter 392, serves as the foundation for debt collection practices in the state. Unlike the federal Fair Debt Collection Practices Act (FDCPA), which applies mainly to third-party collectors, the TDCA covers all collectors, including original creditors.
Under the TDCA, collectors are prohibited from using threats, offensive language, or repeated calls to harass debtors. They also cannot misrepresent the debt’s amount or legal status, use fake names, or send documents falsely claiming to be from a court or government agency.
Collectors must follow strict communication rules, limiting calls to between 8:00 a.m. and 9:00 p.m. If a consumer disputes a debt in writing, the collector must stop all collection efforts until the debt is verified. Texas also provides strong protections for personal assets - wage garnishment for consumer debt is not allowed, except for child support, taxes, or student loans.
"In Texas, if your residence has been declared a homestead, it cannot be taken to pay a debt - except for debts taken for the purchase of the home... for home improvements, for home equity loans or to pay certain taxes."
Violating the TDCA can lead to misdemeanor charges and may also breach the Texas Deceptive Trade Practices Act (DTPA). This could expose collectors to triple damages, attorney fees, and legal injunctions.
In addition to state laws, the FDCPA enforces federal standards on third-party collectors. One key requirement is providing a written validation notice within five days of initial contact, which must include the amount owed and the creditor’s name. The FDCPA also enforces the "7-7-7 rule", which limits collectors to seven calls per debt per week and prohibits calls within seven days after a conversation. Automated calls require prior written consent.
Here’s a quick comparison of the TDCA and FDCPA:
| Feature | Texas Debt Collection Act (TDCA) | Fair Debt Collection Practices Act (FDCPA) |
|---|---|---|
| Applicability | Covers both original creditors and third-party collectors | Primarily applies to third-party collectors and attorneys |
| Wage Garnishment | Not allowed for consumer debt | Permitted if allowed by state law |
| Call Time Limits | 8:00 a.m. – 9:00 p.m. | 8:00 a.m. – 9:00 p.m. |
| Harassment | Bans abusive tactics like threats or excessive calls | Prohibits harassment, abuse, and false threats |
Texas enforces a four-year statute of limitations for collecting most debts, such as written contracts, credit cards, medical bills, and open accounts, as outlined in Section 16.004 of the Texas Civil Practice and Remedies Code. A 2019 update (Texas Finance Code § 392.307) clarified that partial payments or acknowledging a debt do not restart this four-year clock. Once a debt becomes "time-barred", collectors cannot file or threaten to file lawsuits. They must also notify debtors in writing that the debt is time-barred. While lawsuits are off the table, collectors can still try to recover the debt using non-litigation methods.
Promissory notes have a six-year statute of limitations, while court judgments last for ten years but can be renewed. Negative debt information can remain on credit reports for up to seven years.
Debt collection agencies need to carefully track these time limits to avoid illegal practices. Proper documentation is crucial to confirm the age of a debt and ensure compliance with the law.
"Texas debt collection laws under the TDCA (Finance Code 392) remain some of the strictest in the U.S., with rigid communication rules, a 4-year statute of limitations, and heavy TCPA enforcement."
Breaking these rules can lead to criminal charges, civil penalties, and even triple damages under the DTPA, making compliance a top priority for collectors.
Texas debt collection agencies operate under some of the strictest regulations in the country, balancing assertive recovery methods with compliance to state laws. To understand their processes better, it helps to look at how these agencies acquire, assess, and manage debt portfolios, as well as the role technology plays in their operations.
Debt collection agencies in Texas typically acquire debt in two ways: by purchasing charged-off accounts outright or managing portfolios on a contingent fee basis, where creditors accept a partial recovery of the debt. Under Texas law, a debt buyer is defined as anyone who purchases or takes on consumer debt, whether they collect it themselves or hire another party to do so.
Proper documentation is a critical part of the acquisition process. Agencies must maintain a complete chain of title, which includes invoices, contracts, payment histories, and previous communications. This documentation is essential for proving ownership if the debt is disputed or if legal action becomes necessary.
Agencies also need to ensure the debt is within the four-year statute of limitations. Texas law, specifically Section 392.307 of the Texas Finance Code, prohibits lawsuits on time-barred debt and does not allow the statute to restart due to partial payments or reaffirmation agreements. To stay compliant, agencies carefully audit account ages to avoid acquiring debt that is no longer legally actionable.
Evaluating a debt portfolio in Texas requires a deep understanding of both the market and legal constraints. Agencies analyze portfolios based on factors like the type of debt - whether it's related to healthcare, real estate leases, or B2B accounts - and the geographic distribution of debtors across the state. Local court procedures and regional debtor profiles also play a role in determining portfolio value.
The statute of limitations greatly impacts pricing. Debt nearing or exceeding the four-year limit has significantly lower value because collectors must disclose in writing that the debt is time-barred and cannot be subject to legal action. While voluntary repayments are still possible, the lack of legal leverage reduces recovery rates.
Another key factor is whether debtors are "judgment proof." In Texas, certain assets, like a homestead or primary vehicle, are protected under the Texas Property Code. Additionally, wage garnishment is prohibited for most consumer debts. These protections often lead agencies to focus on negotiation and payment plans rather than legal enforcement.
Modern technology has become indispensable for debt collection agencies in Texas. Tools like AI algorithms, skip tracing software, and omnichannel communication platforms streamline operations while ensuring compliance.
Self-service portals have become increasingly popular, offering debtors the ability to view account details and make payments online without needing to interact with an agent. Features like "Click2Pay" or ACH payments simplify the process, and surveys show that 95% of consumers report positive experiences with agencies using such modern systems.
Agencies also rely on specialized platforms like Debexpert to enhance their operations. Debexpert supports secure file sharing, portfolio analytics, and real-time communication, making it easier to manage debt portfolios. For acquisitions, its auction features - such as English, Dutch, Sealed-bid, and Hybrid formats - help streamline the purchasing process while ensuring compliance documentation is in place.
Cloud-based solutions like "Debt Manager" on AWS are also gaining traction. These platforms offer faster deployment and more customization options, reflecting the industry’s shift toward digital-first strategies. They help agencies track invoices, maintain call records for legal purposes, and manage chain-of-title documentation, all of which are crucial for addressing disputes and meeting regulatory requirements.
Sticking to strict ethical standards is essential for agencies working within Texas's regulatory framework. Texas laws firmly ban aggressive recovery tactics to protect consumer trust and ensure compliance with regulations.
The Texas Debt Collection Act (TDCA) goes beyond federal law by extending its rules to both third-party collectors and original creditors, making it vital for anyone collecting consumer debt to prioritize compliance. Violations can lead to serious consequences, including criminal charges and civil lawsuits, which may result in damages and injunctions.
Threats and coercion are explicitly outlawed. Collectors cannot threaten violence, falsely accuse someone, threaten arrest, or claim they can seize property without proper authorization. These actions are prohibited under both state and federal law.
Harassment in any form is also banned. This includes using profane or obscene language, making anonymous calls, or repeatedly contacting someone with the intent to annoy them. Additionally, collectors cannot make collect calls without identifying themselves before the charges are accepted.
Fraudulent representations are another area of concern. Collectors cannot use false names, misrepresent the amount or legal status of a debt, create fake official documents, or falsely imply they are affiliated with an attorney or government agency. To ensure transparency, agencies must keep a record of all names used by collectors, as required by Section 392.304 of the Texas Finance Code.
Unfair practices are strictly limited as well. Collectors cannot demand more than the agreed-upon amount unless authorized by law, deposit post-dated checks before the agreed date, or contact consumers using postcards. For debts where the statute of limitations has expired, Texas Finance Code Section 392.307 prohibits lawsuits or arbitration. Collectors must also include a notice stating:
"The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it."
Communication restrictions address when and how collectors can reach out. As of July 2023, prerecorded debt collection calls to a consumer’s landline are limited to three calls within a 30-day period. On social media, collectors must identify themselves when sending connection requests and cannot post public messages or messages visible to the consumer’s contacts.
| Prohibited Practice Category | Specific Illegal Actions in Texas |
|---|---|
| Threats/Coercion | Threatening violence, arrest, or illegal repossession |
| Harassment | Profane language, anonymous calls, repeated ringing |
| Deception | Using false names, simulating court documents, misrepresenting debt amount |
| Unfair Means | Collecting unauthorized fees, premature check deposits, using postcards |
These restrictions ensure that consumers are protected against abusive practices, empowering them to stand up for their rights.
Beyond identifying illegal tactics, understanding consumer rights is crucial for fair dispute resolution. Debt collectors are required by law to treat consumers with respect. Within five days of the first contact, collectors must send a written validation notice that includes the amount owed, the creditor's name, and instructions on disputing the debt.
If a consumer disputes a debt in writing, the collector has 30 days to investigate and verify the claim’s accuracy. During this time, all collection efforts must pause until proof of the debt - such as a copy of the original bill - is provided. If the debt cannot be verified within 30 days, the collector must correct the record and inform all relevant parties. Using certified mail with a "return receipt requested" helps both sides track delivery and adhere to deadlines.
Consumers also have the right to stop all contact. According to the Texas Attorney General, if a consumer sends a written request via certified mail, the collector may only contact them to confirm they are ceasing communication or to inform them of specific legal actions. The Office of Consumer Credit Commissioner notes:
"A debt collector also may not contact you at work if the collector knows that your employer disapproves of such contacts."
Texas law provides robust protections that limit what collectors can pursue. For instance, wage garnishment is not allowed for regular consumer debt; it’s only permitted for court-ordered child support, unpaid taxes, and defaulted student loans. Similarly, the homestead protection law prevents the seizure of a primary residence for consumer debt, except in cases involving mortgages, home improvements, home equity loans, or certain taxes.
Additionally, third-party collectors in Texas are required to maintain a $10,000 surety bond. This bond serves as a financial safeguard for individuals harmed by violations of the Texas Finance Code, reinforcing the state’s commitment to ethical practices.
Adhering to these ethical guidelines not only protects consumers but also shields agencies from complaints filed with the Texas Attorney General, the Federal Trade Commission (FTC), and the Office of Consumer Credit Commissioner (OCCC). Such complaints can lead to regulatory investigations. In an industry where reputation is key, treating debtors fairly is more than just a legal requirement - it’s a way to build a trustworthy and sustainable business.
In Texas, businesses involved in debt collection must comply with state regulations by filing a $10,000 surety bond. Unlike other states, Texas does not require a formal license or registration application. Filing this bond with the Texas Secretary of State fulfills the primary legal requirement.
Before conducting debt collection activities, third-party debt collectors and credit bureaus must submit a $10,000 surety bond to the Texas Secretary of State. This bond acts as a financial safeguard, ensuring the agency operates lawfully under Chapter 392 of the Texas Finance Code. It also provides a way for harmed parties to file claims if the agency engages in unlawful practices, such as fraud or failure to pay creditors.
The bond must be issued by a surety company authorized to operate in Texas, and it is specifically designated to protect any party harmed by violations of the law. The Texas Secretary of State emphasizes:
"Engaging in debt collection without filing a bond with the secretary of state is a violation of Chapter 392 and may also be a criminal offense."
The cost of the bond is generally affordable, with an annual premium of approximately $100 or monthly payment options around $10. While there is no filing fee to submit the bond, the Secretary of State does not regulate premium rates, so agencies are encouraged to compare prices among authorized surety providers. If a claim is made and paid out, the surety company reimburses the affected party, but the agency is responsible for repaying the full amount, up to the $10,000 limit.
Bonds remain valid until canceled. Either the agency or the surety company must provide a 60-day written notice to the Texas Secretary of State for cancellation. Agencies can verify their compliance status through the Secretary of State's "Debt Collector Search" database.
Once the bond is filed, agencies complete a straightforward registration process to begin operations in Texas.
In Texas, filing the surety bond essentially functions as the agency's legal permit to operate. To meet this requirement, agencies must secure the bond from a surety company authorized in Texas and submit it to the Secretary of State's Registrations Unit.
Beyond the bond, agencies must also comply with tax regulations. This involves obtaining a Texas tax permit from the Texas Comptroller and collecting sales tax on the total charge for debt collection services under certain conditions. According to 34 Tex. Admin. Code § 3.354:
"Debt collectors must obtain a tax permit and collect tax on the entire sales price of their service, or accept a properly completed exemption certificate in lieu of collecting tax."
Texas does not impose additional requirements such as background checks, resident managers, or individual collector registrations. The Secretary of State's role is limited to filing the bond - it does not oversee business practices or handle consumer complaints. Issues related to consumer disputes are managed by the Texas Attorney General or the Federal Trade Commission. However, agencies should check if local municipalities impose additional licensing or certification requirements, as these can vary across the state.
These streamlined processes reflect Texas's emphasis on ensuring ethical practices while minimizing administrative burdens for debt collection agencies.
Debt collection agencies operating in Texas must navigate a strict framework of state and federal regulations. At the heart of compliance lies the $10,000 surety bond, which must be filed with the Texas Secretary of State to ensure lawful operations. Agencies are also required to follow the Texas Debt Collection Act (TDCA) and the Fair Debt Collection Practices Act (FDCPA), alongside Texas's 4-year statute of limitations on most consumer debts.
Modern agencies in 2026 increasingly rely on tools like automation and AI to reduce errors that could lead to costly legal consequences. FinanceOps highlights the risks:
"a single misstep, an incorrect validation notice, a time-barred disclosure error, or a TCPA autodial violation, can trigger $1,000 in statutory damages or $500–$1,500 per unlawful call".
The 7-7-7 rule, which caps outreach at 7 calls per debt per week and enforces a 7-day waiting period after contact, helps agencies maintain professionalism and avoid harassment claims.
For businesses working with Texas collection agencies, verifying compliance is crucial. Use the Texas Secretary of State's "Debt Collector Search" tool to confirm an agency’s valid $10,000 bond. Consumers in Texas also benefit from robust protections, such as wage garnishment limits and homestead exemptions, emphasizing the need for ethical collection practices.
With complaints to the CFPB nearly doubling and the Texas Attorney General increasing enforcement actions, agencies must prioritize transparency, maintain detailed chain-of-title records, and honor stop-contact requests. These measures are essential for thriving in an environment where regulatory oversight continues to intensify.
To check if a Texas collector is properly bonded, visit the official database provided by the Texas Secretary of State. This resource lets you confirm whether their bond is active, pending cancellation, or canceled. Always ensure the bond is valid before moving forward.
If you're approached about an old debt, it's important to understand your rights under both Texas and federal laws. You have the right to ask the collector to stop contacting you, but this request must be made in writing. To ensure it's documented, send the request via certified mail and keep a copy for your records.
For help managing debt collection issues or reporting potential scams, consider reaching out to trusted resources like the Texas State Law Library or the Texas Attorney General’s Office. Staying informed about your rights is key to protecting yourself.
If you want to dispute a debt and stop collection calls in Texas, start by sending a certified letter to the debt collector. In the letter, clearly request that they stop contacting you. Make sure to keep a copy of the letter for your records. If you believe the debt is not valid, you can dispute it in writing as well.
Both state and federal laws require collectors to verify debts and prohibit harassment. If the problem continues or becomes overwhelming, it might be a good idea to consult an attorney who understands Texas debt collection laws.
More than a decade of Ivan's career has been dedicated to Finance, Banking and Digital Solutions. From these three areas, the idea of a fintech solution called Debepxert was born. He started his career in Big Four consulting and continued in the industry, working as a CFO for publicly traded and digital companies. Ivan came into the debt industry in 2019, when company Debexpert started its first operations. Over the past few years the company, following his lead, has become a technological leader in the US, opened its offices in 10 countries and achieved a record level of sales - 700 debt portfolios per year.
.svg){kind=icon}
.svg){kind=icon}
.svg){kind=icon}
