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Beginner's Guide to Collecting on
Unpaid Debts in Texas

Money and financial commitment are the bedrock of most business transactions and interactions. It follows that there would be cases of unfulfilled commitment and as a result, debts would accrue. As with other aspects of business interactions, some legal injunctions and providences guide the process of debts collection in a business.

This article will discuss the process of debts collection in Texas. The guide provided will be reminiscent of the legal provisions and also spell out the details involved, hence the title “a beginner’s guide”.

How to Collect on Unpaid Debts in Texas

If you are owed some amount of money by an individual or a business, you can get the money back in numerous ways. First off, you can get the money back by yourself. You can do this by contacting the debtor and enquiring about the debts. You can also draw up a payment plan for the collection of the debts with the part involved.

However, this approach relies on the preparedness of the defaulting party to pay up the debt. In most cases, this doesn’t happen. The defaulting party is ‘defaulting’ because the debt is still owed which doesn’t speak well of the preparedness to pay the debt. In this case, one of the available methods of debt collection in Texas is the use of debt collection agencies.

What are Debt Collection Agencies?

As the name implies, debt collection agencies are business that specializes in retrieving their customer’s delinquent debts and remitting them to the original creditor. If you are facing trouble in recovering debts owed to you, you can approach debt collection agencies for help. It is important to state that some debt collection agencies are individual debt collectors, while some are attorneys. However, some proper debt collection agencies are registered as an organization and have full-time employees that see to the collection of your delinquent debts.

One observation you might have made is the emphasis on delinquent debts. Delinquent debts are those that are past the 60 days mark. If someone or a business fails to pay up its debt for more than 60 days after the agreed repayment date, such debts are referred to as delinquent.

How Debt Collection Agencies Work

Before discussing the modus operandi of these debt collection agencies, it is important to explain that there are different types of debt collection agencies, the same way there are different types of debts. Some agencies specialize in the type of debts they collect. For instance, some agencies will only work on debts that are at least $200 and less than two years old. Others use the statute of limitation in Texas to determine the type of debts that work on. The statute of limitation specifies the debts that are not too old to recover.

Debt collection agencies act on behalf of the original creditor to recover delinquent debts. The agencies reach out to the defaulting party through letters or telephone calls and try to convince them to repay their debts. If the agency cannot reach the defaulters, the law permits them to source the contact information through the use of software, private investigators, and by contacting their workplace or friends.

The agency can also search for the debtor’s assets and brokerage accounts to determine the ability to pay up the debts. However, despite the various avenues provided by the law for debt collectors to get the debts from defaulters, debt collectors cannot seize a paycheck or reach into the defaulter’s bank account. The debt collection agency only relies on the defaulter to pay up.

However, if the debt collector obtains a judgment - writ of execution, the debt collector may be able to garnish the defaulter’s wages or reach into their bank account. To get this writ of execution, the agency needs to take the defaulter to court before the expiration of the statute of limitation and win the case. This means that the court must make a ruling that the debtor must repay a certain amount to the agency. However, the law in Texas doesn’t allow for this writ of execution.

Despite this ruling, the debt collection agency must reach the debtor’s employers and bank to request the money. When the debt collectors finally get the debt back, they get paid between 25 - 50% of the recovered debts as the fee for their services. The eventual percentage depends on the agreement between the creditor and the agency.

Legal Injunction Regarding Collection of Unpaid Debts

  • Debt collection is well within the law and is not illegal. You can be contacted on behalf of the creditor to pay up your debts.
  • However, debtors have a right to be treated with respect, fairly, and with dignity by the debt collection agency. This means that the debt collector cannot harass or insult you. They can also not call you at inconvenient times such as before 8 am and after 9 pm, except previously agreed.
  • The debt collector cannot result in the use of threats of harm and violence to get the debts.
  • Debt collectors can contact your place of work as long as your employer doesn’t object. You can have your employer write to the debt collector showing displeasure and dissuading the agency from further calling the establishment.
  • Debt collectors cannot attempt to collect the debts from third parties such as your friends, family, and co-employers. They can only contact them to get your location information.
  • You can send a letter to the debt collector to stop contacting you. However, this doesn’t mean that you don’t owe the debts anymore. The debt collector can still sue you after receiving and acknowledging the letter.
  • The debt collector cannot arrest you or imply that you have committed a crime by owing a debt. They can only sue you for the failure to pay the debts.
  • If you feel like you don’t owe the debts, you must write to the debt collector within 30 days of initial contact stating that you don’t have any debt. The debt collector must stop contacting you after the receipt of this letter. The agency can only continue after providing proof that you indeed owe the debt.
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