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Texas has strict laws to protect you from abusive debt collection practices while allowing creditors to recover legitimate debts. The Texas Debt Collection Act (TDCA) applies to all entities collecting consumer debts, including original creditors and third-party collectors. Here's what you need to know:
Violations can lead to civil and criminal penalties, including fines and lawsuits. If you're dealing with debt collection issues, understanding these laws can help you protect your rights.
Texas TDCA vs Federal FDCPA Debt Collection Laws Comparison
The Texas Debt Collection Act (TDCA) is outlined in the Texas Finance Code, Chapter 392. It sets the rules for collecting consumer debts within Texas, ensuring that consumers are treated fairly while allowing lawful debt collection practices.
Let’s dive into the purpose of this law and how it balances consumer protection with debt collection.
The TDCA is designed to shield consumers from unethical debt collection practices while providing clear guidelines for those collecting debts. What sets this law apart is its extensive scope. According to the Office of Consumer Credit Commissioner:
"Texas law addresses actions taken by anyone trying to collect on a consumer debt."
This means the TDCA applies to original creditors, third-party collectors, and debt buyers - essentially anyone involved in consumer debt collection. The law explicitly bans certain practices, such as:
Additionally, the TDCA imposes a bonding requirement for third-party collectors, as shown in the table below.
While the TDCA shares similarities with the federal Fair Debt Collection Practices Act (FDCPA), it also has distinct differences. Unlike the FDCPA, which focuses on third-party agencies and attorneys, the TDCA covers all entities collecting consumer debts, including original creditors. Sheila A. Albin, Associate General Counsel at NCUA, highlights:
"While both laws prohibit false and misleading representations, the TDCA extends those prohibitions to any creditor, such as a credit union, acting on its own behalf in collecting its own debts."
The TDCA also enforces civil remedies and criminal penalties, while the FDCPA is limited to civil enforcement. Violations of the TDCA are considered breaches of the Texas Deceptive Trade Practices/Consumer Protection Act (DTPA), granting the Texas Attorney General authority to act in the public's interest.
| Feature | Federal FDCPA | Texas TDCA |
|---|---|---|
| Who is covered? | Third-party agencies and attorneys | Anyone collecting consumer debt, including original creditors |
| Bonding Requirement | None | $10,000 surety bond for third-party collectors |
| Penalties | Civil remedies | Civil remedies and criminal penalties |
| Enforcement Authority | Federal Trade Commission (FTC) | Texas Attorney General, District/County Attorneys |
| Wage Garnishment | Allowed for consumer debt (with limits) | Prohibited for consumer debt |
The Texas Debt Collection Act (TDCA) sets clear boundaries to safeguard consumer rights. It lays out what constitutes harassment, bans deceptive tactics, and prohibits unfair practices by debt collectors.
Harassment is strictly defined under the TDCA. Debt collectors cannot use abusive language, threaten violence, or falsely accuse you of criminal activity. They are also forbidden from making anonymous calls or bombarding you with multiple harassing phone calls.
Collectors must adhere to specific timeframes for contacting you. Calls made before 8:00 a.m. or after 9:00 p.m. are generally not allowed. Additionally, they cannot place collect calls without revealing their identity before you agree to accept the charges.
Social media communication is another area with strict rules. Collectors must identify themselves when sending private messages and are prohibited from discussing your debt publicly or in ways visible to others on your social platforms. According to the Consumer Financial Protection Bureau, failing to disclose their role as a debt collector in social media interactions is considered a form of misrepresentation.
These rules are just the start - Texas law also addresses deceptive practices in debt collection.
Debt collectors are barred from using false names or misrepresenting the amount or status of your debt. They cannot send documents that appear to be official court or government notices when they are not. Impersonating licensed professionals or officials is also strictly prohibited.
Threats to garnish wages for consumer debts or seize your homestead often signal a scam. As the Texas Attorney General explains:
"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."
Similarly, wage garnishment laws in Texas are very specific. The Attorney General further clarifies:
"Wages may be garnished only to pay debts related to court-ordered child support, back taxes, and defaulted student loans. Debt collectors cannot garnish wages for repayment of consumer debt."
Beyond misrepresentation, Texas law also targets unfair collection tactics.
The TDCA prohibits several unfair practices. Collectors cannot demand fees not authorized by your contract or by law. They are also forbidden from cashing post-dated checks early or tricking you into incurring collect call charges.
For debts that are past the statute of limitations, collectors cannot sue or initiate arbitration. If they attempt to collect this type of debt, they must include a clear notice in 12-point boldfaced, capitalized, or underlined text 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".
Additionally, collectors must follow specific notification rules. Within five days of their first contact, they are required to send a written notice that includes the amount owed and the creditor's name. If you dispute the debt in writing, the collector has 30 days to verify its accuracy. However, as the Office of Consumer Credit Commissioner points out:
"The law does not erase any legitimate debt you owe."
The statute of limitations is a key legal concept for creditors, collectors, and debt buyers operating under the Texas Debt Collection Act (TDCA). It defines the time frame in which a creditor or collector can file a lawsuit to recover unpaid debt. In Texas, this period begins either from the date of your last payment or when the account first goes into default. Once four years pass, the debt becomes "time-barred", meaning creditors lose the legal right to sue for repayment.
However, even though time-barred debt can no longer lead to a lawsuit, it doesn't disappear entirely. It can remain on your credit report for up to seven years. As the Texas State Law Library notes:
"Texas law gives someone 4 years to bring a lawsuit for unpaid debt. This time period is commonly referred to as the statute of limitations."
Debt collectors can still contact you about time-barred debt through phone calls or letters, but they cannot pursue legal action.
In Texas, the four-year statute of limitations applies to most types of consumer debt, such as credit card balances, medical bills, and personal loans.
Court judgments, however, follow a different timeline. If a creditor secures a judgment within the four-year window, it remains enforceable for 10 years. Creditors can renew the judgment to extend its validity, but if they fail to renew it within that period, the judgment becomes dormant. Once dormant, creditors have a two-year window to request revival.
Debt buyers face strict penalties for attempting to collect time-barred debt. According to Texas Finance Code § 392.307, filing lawsuits or initiating arbitration after the four-year limit is explicitly prohibited. The law states:
"A debt buyer may not, directly or indirectly, commence an action against or initiate arbitration with a consumer to collect a consumer debt after the expiration of the applicable limitations period..."
In 2019, a critical amendment to the Texas Finance Code addressed the issue of "zombie debt." This amendment prevents debt buyers from reviving the statute of limitations through partial payments, written acknowledgments, or any other consumer actions. The code clearly states:
"If an action to collect a consumer debt is barred... the cause of action is not revived by a payment of the consumer debt, an oral or written reaffirmation of the consumer debt, or any other activity on the consumer debt."
Collectors who threaten legal action for time-barred debt are in violation of both Texas and federal laws. Such threats can lead to legal consequences, including penalties and enforcement actions by the Texas Attorney General. These protections are an essential part of Texas debt collection laws, ensuring compliance with the TDCA and safeguarding consumers from unlawful practices.
Texas law expands on the protections of the Texas Debt Collection Act (TDCA), giving consumers the power to challenge inaccuracies and push back against unlawful debt collection practices.
Collectors in Texas are required to provide written validation before they can pursue payment. Within five days of their first contact, they must send you a validation notice. This notice must include the amount owed, the creditor's name, and instructions on disputing the debt.
If you believe the debt is incorrect, you can dispute it by sending a written notice via certified mail with a return receipt. Once your dispute is received, the collector must pause all collection efforts for 30 days while they verify the debt. If they fail to verify the debt within that time, they are required to correct the information and notify anyone who previously received an incorrect report.
Avoid sharing personal or financial details over the phone until you’ve confirmed the collector’s identity and received written proof of the debt’s legitimacy. If you provide a police report or an identity theft report from the FTC, the creditor must stop all collection activities immediately.
Next, let’s look at how Texas law protects wages and offers ways to address collection abuses.
Texas law protects your current wages from being garnished for consumer debts like credit cards, medical bills, or personal loans. As the Texas Attorney General explains:
"Wages may be garnished only to pay debts related to court-ordered child support, back taxes, and defaulted student loans. Debt collectors cannot garnish wages for repayment of consumer debt."
The only exceptions to this rule are garnishments for court-ordered child support (up to 50% of your disposable income), spousal maintenance, federal student loans in default (up to 15% of your pay), and unpaid federal taxes. If a debt collector threatens to garnish your wages for consumer debt, report them immediately. Additionally, Texas law prohibits employers from firing, disciplining, or refusing to hire someone due to a wage garnishment order.
While your wages are protected, funds in your bank account may not be. If a creditor obtains a court judgment, they may issue a writ of garnishment to seize funds. However, certain deposits - like Social Security benefits - are exempt. If you receive exempt funds through direct deposit, you can protect them by notifying your bank with an "anti-garnishment letter".
Now, let’s explore how to report illegal collection practices under Texas law.
If a debt collector violates Texas collection laws, you have several ways to take action. The Texas Attorney General's Consumer Protection Division investigates violations of the Texas Debt Collection Act. You can reach them at 800-621-0508 or file a complaint via their online portal. For issues involving licensed non-depository lenders, such as payday lenders or pawnshops, contact the Office of Consumer Credit Commissioner (OCCC) at 800-538-1579.
To verify a collector’s legitimacy, check the Texas Secretary of State’s database. Third-party collectors must post a $10,000 surety bond with the Secretary of State. If you discover a collector operating without this bond, report them to the SOS Registrations Unit. Federal law violations can also be reported to the Federal Trade Commission (FTC) at 1-877-382-4357.
Keep thorough records of all interactions with collectors. Note the dates, times, and names of representatives you speak with. Since the Texas Debt Collection Act allows consumers to file private lawsuits, consider consulting an attorney if you wish to seek damages or an injunction for violations.
Texas has a distinct approach to regulating debt collectors. While the state doesn’t require a license, strict rules govern how collectors and debt buyers operate. Staying informed about these requirements is crucial to avoid violations and ensure lawful practices.
In Texas, debt collectors aren’t required to hold a specific license. However, they must file a $10,000 surety bond with the Texas Secretary of State. The 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."
There’s no additional registration process beyond filing the bond, and no filing fee is required. Once filed, the bond details become publicly accessible through the Secretary of State's "Debt Collector Search" database, allowing consumers and businesses to confirm compliance. While the Secretary of State manages bond filings, the Texas Attorney General is responsible for investigating violations of the Texas Debt Collection Act.
Debt collectors must meet detailed record-keeping obligations alongside bond requirements. For instance, collectors need to maintain thorough records of all business names used in their operations. If you also provide debt management services (under Texas Finance Code Chapter 394), you’re required to keep files for each debt management plan for at least three years after the last service. These records should include:
Records can be stored in any format, as long as they are easily accessible. The Texas Administrative Code specifies:
"All required books and records must be reasonably available for inspection at any time by OCCC staff."
Additionally, if a consumer disputes a debt and you find the information to be incorrect, you’re obligated to notify all parties who previously received the inaccurate report. This must be done within the 30-day investigation period following the consumer’s written dispute. Maintaining precise records not only ensures compliance but also provides protection during disputes.
Debt buyers face additional obligations under Finance Code §392.307, particularly when managing large debt portfolios. One critical rule: you cannot sue or initiate arbitration to collect consumer debt after the four-year statute of limitations expires. The law explicitly states:
"A debt buyer may not, directly or indirectly, commence an action against or initiate arbitration with a consumer to collect a consumer debt after the expiration of the applicable limitations period."
Importantly, time-barred debt cannot be revived. This means that neither a partial payment from the consumer nor any verbal or written reaffirmation can restore your right to take legal action once the statute of limitations has passed.
When collecting time-barred debt, your initial written communication must include specific statutory notices in at least 12-point type. The notice must stand out - whether bolded, capitalized, underlined, or otherwise distinct. For example, if the debt is still reportable to credit agencies, your notice might read:
"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. IF YOU DO NOT PAY THE DEBT, [INSERT NAME OF DEBT BUYER] MAY CONTINUE TO REPORT IT TO CREDIT REPORTING AGENCIES AS UNPAID FOR AS LONG AS THE LAW PERMITS THIS REPORTING. THIS NOTICE IS REQUIRED BY LAW."
Lastly, debt buyers must maintain the $10,000 surety bond at all times. Failure to comply with these requirements can lead to penalties of at least $100 per violation.
When Texas debt collection laws are violated, the consequences can be serious. Knowing the penalties and enforcement mechanisms helps both debt collectors and debtors understand their rights and responsibilities.
The Texas Debt Collection Act (TDCA) outlines strict penalties for violations. If illegal collection practices cause financial harm, actual damages can be awarded to cover those losses. Courts may also grant injunctive relief, which orders the offending party to stop engaging in unlawful behavior.
A statutory minimum penalty of $100 per violation applies to infractions like failing to meet bond requirements, making prohibited threats, or filing incorrect information - even if no actual harm is proven. On top of that, successful plaintiffs can recover reasonable attorney's fees and court costs, making legal action more accessible. However, if the court finds that a lawsuit was filed in bad faith or to harass, the defendant may be awarded attorney's fees instead.
Criminal penalties also come into play. The Texas Attorney General’s office emphasizes:
"Violators of the Texas Debt Collection Act are subject to criminal and civil penalties. If you think you have been harassed or deceived, you can even seek injunctions and damages against debt collectors".
Operating without the required $10,000 surety bond is considered a criminal offense. Additionally, violations of the TDCA are automatically considered violations of the Texas Deceptive Trade Practices/Consumer Protection Act (DTPA), which gives the Attorney General greater authority to act on behalf of the public. These layers of penalties ensure robust enforcement of the law.
The Texas Attorney General plays a key role in enforcing debt collection laws. The Attorney General’s office investigates violations and can take legal action to stop unlawful practices under the TDCA. Complaints from consumers facing harassment or deceptive actions are handled by the Consumer Protection Division.
The Texas Secretary of State oversees surety bond filings and refers any violations related to these bonds to the Attorney General for further investigation. Meanwhile, the Office of Consumer Credit Commissioner (OCCC) regulates licensed lenders but does not oversee third-party debt collectors. For issues involving third-party collectors, enforcement falls under the Attorney General’s jurisdiction. Local district and county attorneys may also investigate violations, particularly those involving criminal conduct.
Debtors subjected to illegal collection practices have several options for seeking justice. You can file a private lawsuit to request injunctive relief, stopping the illegal actions, and seek compensation for any financial losses. For specific violations, like failure to meet bond requirements or making unlawful threats, you are entitled to the $100 statutory minimum per violation, even without proving harm.
Collectors are required to maintain a $10,000 surety bond, which you can verify through the Secretary of State's "Debt Collector Search" database. If a collector hasn’t filed the bond, that’s a violation you can act on.
To strengthen your case, send dispute letters or cease-contact notices via certified mail with receipt confirmation. This provides a paper trail. Collectors must verify the debt’s accuracy within 30 days of receiving your dispute and cease collection efforts if they can’t verify it. If a collector wrongfully seizes exempt property - like your homestead or certain personal belongings - you can take legal action to recover it.
You can also file formal complaints with the Texas Attorney General’s Consumer Protection Division, the OCCC (for licensed lenders), or the Federal Trade Commission. These agencies have the authority to investigate and enforce the law, even if you choose not to file a private lawsuit.
Texas debt collection laws demand strict compliance from both debt collectors and buyers. The Texas Debt Collection Act (TDCA) extends its reach beyond federal regulations by covering original creditors as well as third-party collectors. Violating these laws can lead to serious repercussions, including criminal penalties.
Debt buyers must work within a four-year statute of limitations, after which debt cannot be revived. This makes timely and accurate portfolio assessments crucial. Additionally, when pursuing time-barred debt, collectors are required to include a clear disclosure in at least 12-point bold type, notifying the debtor that the debt is time-barred. These rules emphasize the need for precise compliance with statutory obligations.
Texas also enforces strict wage garnishment restrictions and homestead protections, which means threatening exempt assets is not only unethical but could also be considered fraudulent. The Texas Attorney General has the authority to impose both criminal and civil penalties for violations, further highlighting the importance of adhering to these laws.
To ensure compliance, debt collectors should focus on proper bonding, providing clear disclosures, and respecting cease-contact requests. These practices not only safeguard consumer rights but also help maintain the value and integrity of debt portfolios. By balancing ethical considerations with legal requirements, businesses can build sustainable collection practices that align with Texas's legal framework.
Ultimately, prioritizing compliance and ethical behavior reduces risks, ensures operational stability, and strengthens the foundation for long-term success in Texas's debt collection landscape.
If a collector threatens to sue you over an old debt, it’s important to know that Texas law strictly forbids harassment and false threats during debt collection. If you believe a collector has crossed the line, you have the option to file a complaint with either the Texas Attorney General or the Texas Office of Consumer Credit Commissioner. Knowing your rights under Texas debt collection laws can help you handle these situations with confidence and take the necessary steps to protect yourself.
In Texas, creditors are not allowed to freeze your bank account unless they secure a court judgment against you. Without this judgment, they lack the legal right to take such action.
To find out if a debt collector is bonded in Texas, you can use the Texas Secretary of State's database. This resource provides information on individuals and entities that have filed debt collector bonds. It also includes details about the bond's status - whether it's active, pending cancellation, or canceled - along with the principal's name and the bonding company involved. Under Texas law, third-party debt collectors are required to file a $10,000 surety bond with the Secretary of State.
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.
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