Debt collection is the process by which a person or entity who is owed money or property seeks payment for the debt. Debt collection may be performed by the person or entity who is owed the debt (the creditor), or may be performed by a third-party debt collector hired by the creditor to collect the debt on behalf of the creditor. Sometimes creditors sell the debt to another entity at a discounted value, and the entity that purchases the debt becomes the creditor.
Debts that are often the subject of debt collection efforts include (1) credit card debt; (2) car or auto loan debt; (3) medical debt; (4) student loan debt; (5) unpaid utility and telephone bills; and (6) personal loan debt.
If you owe money, you have a legal obligation to repay it. But state and federal laws—such as the Fair Debt Collection Practices Act—prohibit debt collectors from using deceptive or abusive behavior to collect the debt.
In Texas, debt collection is regulated by both state statutes and federal law. The Texas Debt Collection Act (TDCA) provides state-specific regulations, while the Fair Debt Collection Practices Act (FDCPA) governs debt collection practices at the federal level. The TDCA prohibits debt collectors from using fraudulent, abusive, or unfair practices to collect debts, similar to the FDCPA. This includes prohibiting false accusations of crime, threats of violence, and the use of obscene language. Debt collectors in Texas must also adhere to rules regarding when and how they can contact debtors, such as not calling at unreasonable hours or at the debtor's workplace if it is prohibited by the employer. If a debt is sold to a third party, the new creditor has the same rights and must follow the same laws as the original creditor. Consumers in Texas have the right to request verification of the debt and may dispute any inaccuracies. Violations of these laws can result in penalties for the debt collectors and potential remedies for the consumers, including the right to sue for damages.
