Overview of Debt Collection Law

You do not have to let yourself be harassed by collectors. The Federal Fair Debt Collection Practices Act and the Texas Debt Collection Act provide you with important protections from deceptive practices, harassment and abuse.

Both statutes apply to any attempt to collect a consumer debt. They apply to you whether you owe the debt or not. They do not apply to business debts, even if the business is small and the owner is personally liable for the debt.

These two laws have substantial differences. The primary difference is that the Federal Act applies only to debt collectors, whereas the Texas Act applies to both debt collectors and creditors.

However, the Federal Act provides certain protections that the Texas Act does not. It gives you powerful tools for making debt collectors verify their claims and for enabling you to force them to leave you alone that are in many ways much broader than the dispute handling provsions included in the Texas Act.

In addition, the Federal Act allows you to recover in court compensation for your actual harm, such as emotional distress and financial losses, from violations of the Act or up to $1,000.00 if you can’t show any actual harm. The Texas Act, in almost all cases, requires you to show actual harm from violations of the Act in order to recover money in court. If you can prove the violations were knowing or intentional, you may be able to recover as much as three times your actual damages under the Texas Act, although this can be difficult to actually do, particularly in conservative areas of the state.

Rather than try to explain all the differences between the two acts, I’ve summarized some of the most important rights they give you into two lists, one for debt collectors covered by the Federal Act, and one for creditors and debt collectors covered by the Texas Act. For more information about which law applies in which situation, go to my What Debt Collection Law Applies? page.

Protection From Debt Collectors

A debt collector is anyone in the business of collecting delinquent debts, such as a collection agency and its employees, a law firm that regularly collects debts, or a delinquent debt buyer. A debt collector may not:

Tell any third party about your debt other than a credit reporting agency.
Contact any third party more than once trying to locate you.
Contact you before 8:00 a.m. or after 9:00 p.m.
Contact you at work if it knows your employer prohibits such communications.
Contact you if you have asked it not to or told it you refuse to pay the debt.
Deposit or threaten to deposit a post-dated check before the date on the check.
Make collect calls or other calls that you are charged for, such as calls to your cellphone.
Fail to send you a disclosure, within 5 days of its first contact with you, stating: the amount of the debt, the name of the creditor to whom the debt is owed, the fact that you have a right to request verification of and/or dispute the debt within 30 days of the date of the letter, and an offer to provide the name and address of the original creditor it is different from the current creditor.
Continue to collect a debt if you have requested verification or disputed the debt within 30 days of the date of the notice that you have the right to do so and the debt collector has not provided the requested verification or responded to the dispute.
Continue to collect a debt if you have disputed the debt and the debt collector has not responded to the dispute. (Texas Residents Only).
Protection From Both Debt Collectors and Creditors

A creditor generally includes those who extend credit, such as banks, credit unions, credit card companies, utility companies, merchants, car dealers, and mortgage companies. Neither a debt collector or a creditor may:

Make false, misleading or deceptive statements, including misrepresenting the amount of a debt or the consequences of not paying. This is one of the most common violations of the debt collection laws, particularly in Texas, where generous homestead and asset protection laws prevent creditors from garnishing wages or forcing the sale of your home to satisfy a judgment. See my Warybuyer Guide to Texas Homestead and Asset Protection Laws for more information about how your are protected from debt collection threats.
Harass or abuse you.
Threaten violence or use profane language.
Contact you by telephone repeatedly.
Use phony government or court documents.
Make collect calls or other calls that you are charged for, such as calls to your cellphone, without first identifying itself.
Falsely claim to be an attorney or working for an attorney, or to have legally reviewed your file.
Fail to communicate the fact that the debt is disputed in communications with credit reporting agencies if that is the case.