Texas is changing collections law effective September 2019
On June 14, 2019, Texas Governor Greg Abbott, HB 996, signed Amending Chapter 392 of the Texas Finance Code on Debt Collection. The changes come into force on September 1st, 2019.
The bill defines a “buyer of debt” as “a person who buys or otherwise acquires a consumer debt from a creditor or other subsequent owner of the consumer debt, regardless of whether the person collects the consumer debt, engages a third party, the consumer collect debts or hire an attorney to prosecute a debt collection process related to consumer debt. ”An exception to this definition is“ a person who acquires defaulted or written off debt that is associated with the purchase of a portfolio that is predominantly made up of uncollected Consumer debt exists “. “Debt written off” is defined as “consumer debt that a creditor has identified as a loss or expense to the creditor rather than an asset”. Thus, the definition of “debt buyers” appears to only encompass buyers of portfolios with written off debt and not buyers of portfolios that consist primarily of short-term debt.
The bill prohibits a debtor from filing a lawsuit against a consumer or initiating arbitration to collect a consumer debt after the statute of limitations has expired. It provides that if a debt collection action is precluded by this prohibition, the cause of action will not be revived by payment or verbal or written confirmation of consumer guilt.
If a debt buyer tries to collect a debt for which a debt collection procedure is excluded, the debt buyer or a debt buyer acting on behalf of the debt buyer must make a specific notification in the first written communication with the consumer. The content of the notice will depend on whether the FCRA deadline for reporting the disputed debt has expired and whether the debtor is providing information about the debt to a consumer reporting agency.
Copyright © by Ballard Spahr LLPNational Law Review, Volume IX, Number 175