chess-newQ:  What is the process for Texas Debt Collection?

If you or your business is owed money, there is a 3-step process to Texas’ debt collection.

Step 1. Debt Collection Demand Letter:

Step 1 is the demand letter. There are federal and state requirements when demand letters are written from debt collectors. The demand letter typically includes the name of the creditor, the amount of the debt: the opportunity to dispute the debt, and/or request written verification of the debt. Demand letters also often include a deadline by which to respond or pay. Demand letters are NOT a prerequisite to filing lawsuits in Texas, but are an option for collecting pre-suit. Payment plans prior to filing suit can also help pay for the cost of the lawsuit, if necessary. When a Demand Letter does not produce payment, then legal action is necessary to collect.

Step 2.  Filing a Collection Lawsuit:

If you want to collect Texas debt, then most often a civil lawsuit is necessary. The process involves filing a Petition in civil Court requesting JUDGMENT against the defendant (debtor). If the debtor disputes the allegations, then the defendant can file an ANSWER, AFFIRMATIVE DEFENSES, and/or a counterclaim. The defendant does not legally owe the money until proven in court and a judgment is entered. There can be multiple options available for the defendant to delay the process. There are decisions to be made with your attorney on determining where to file and the most efficient way to collect. Although a money judgment acts as a lien on all real property in Texas, it does not guarantee payment of the debt. Most often, enforcement of the judgment is necessary.

Step 3.  Enforcing the Texas Money Judgment:

The goal of the lawsuit is to not just obtain a money judgment, it is to collect the money owed. To collect on the money judgment, sometimes it is necessary for creditors to force a sheriff’s sale of personal property, real property, vehicles and/or assets of the debtor. Also, seizing a bank account can be the most effective way to collect your money, or a Court Order to Turnover assets for sale, Texas is a debtor friendly state because wages cannot be garnished.

Q: How long are Texas judgments valid for?
A:  Texas Judgments are valid for 10 years at which point they can be renewed with the county courts.

Q: What is the statue of limitations for contracts in Texas?
A:  The statue of limitations for breach of contracts in Texas is 4 years.

Q. How do I know if my case is collectible?
A:  The answer is you don’t. You can do background checks on assets, vehicles, bank accounts, etc. However, Texas debt collection is not a game of certainty. Many times, we will collect debt on cases we thought may be difficult, and other times individuals with plenty of time and money are able to avoid collection. The keys to collecting are patience, consistency and persistence. Once you obtain the money judgment, you need to be smart about what options are available.  Each case is different, but more often than not, your debt or receivable can be collected if your attorney remains persistent.

Q: What do debt collectors typically charge in Texas?
A:   Debt collectors in Texas include both attorneys and non-attorneys. Depending upon the age and/or amount of the debt, most contingency fees range between 25% to 50%. Many collection firms will charge clients 50% of the debt recovered: Most clients who are owed money are better off hiring attorneys directly. With 30 years of experience at our Law Firm, we will guide you in the right direction.