There are laws in place to protect debtors. In the State of Texas, there are strict statutes of limitations for pursuing or collecting a debt. While the Federal Debt Collection Practices Act (FDCPA) was established by federal lawmakers to protect debtors, the Texas Debt Collection Act is Texas’ version of the FDCPA. The state law covers the same topics as the FDCPA because they both prohibit those who are collecting debts from using any abusive, fraudulent, or misleading tactics while trying to collect debts.
How the Laws Apply to Debt Collection
Federal law is only applicable to debt collectors who are employed by attorneys that are hired to collect debts or for debt collection agencies. The Texas version of the law has a farther-reaching scope than the FDCPA. The state laws are applicable to anyone who is trying to collect consumer debts, regardless of how they are affiliated with the debt. The Texas Debt Collection Act also sets a statute of limitations for collecting debts. In Texas, debt collectors only have four years to collect a debt, and that limited timeframe means that debt collectors cannot pursue legal action against a debtor if a debt is more than four years old.
What if the Statute of Limitations to Collect Debt Has Passed?
You might wonder when the four-year timeframe starts counting in Texas. There have been debates as to when the clock starts to run for the four years. The creditors argue that the clock starts running when you made your final payment on the debt to the creditor. But many consumer lawyers argue that the clock starts ticking on the day that the first sign of defaulting on the debt occurs.
There have been conflicting decisions from Texas courts regarding when the start of the debt statute of limitations gets underway. Usually, a consumer is in default based on their credit agreement when they don’t make the minimum payment as set per the contract. If you go by the actual date of default that is set in your agreement, the clock determining the statute of limitations most likely started long before the last payment was made, especially when the last payment that you made was less than the minimum payment that was due.
Being Sued for Old Debt
If you are being sued for a debt, you should try to determine when you made your last payment. If the last payment was made longer than four years before the lawsuit was filed in a Texas court, you might be able to argue that the statute of limitations has expired so you can ask that the lawsuit is dismissed. The rules regarding the statute of limitations on Texas debt collection is based on when the lawsuit is filed and not when you were served with a notification of the lawsuit. You must be properly served notification of the lawsuit as well. If you believe that you are being sued for a debt that is too old to collect, you might be able to answer the summons using the statute of limitations as your defense.
Running into financial trouble is always a trying time, especially in cases where old debt is coming back to bite you. You may have a legal defense if you are being sued for old debt or there may be other legal avenues to explore such as filing for bankruptcy. This is why it is crucial that you work with an experienced debt and bankruptcy attorney like those at Fears Nachawati.
If you are being sued for old or considering filing for bankruptcy, it’s important to get help from an experienced bankruptcy lawyer. Please call (866) 705-7584 or visit the offices of Fears Nachawati located throughout Texas, including in Houston, Dallas, Austin, Fort Worth, and San Antonio.