Although the oil industry has made Texas economy stronger and people owe less than the national average, there are still debt problems in the state. The state has one of the lowest credit scores due to inability to pay bills on time. Texas also records one of the highest records on identity theft. Just like it is down in other states, Texas has its version of the Federal Fair Debt Collection Practices Act (FDCPA) called the Texas Debt Collection Act. This law works in conjunction with the federal law to increase the financial protection of the consumer.
The statute of limitation is the duration within which a person can take legal action on someone in a situation. The statute of limitations on debt is the amount of time a creditor takes to sue a debtor. You should note that the court does not keep track of the statute of limitation for any debt. It is up to the debtor to prove that the statute of limitation has expired. Every state has its statute of limitation. The one for Texas is different from that of other states.
There are different categories of debts and there are provisions for all the categories of debts in the statute of limitation. For Texas, all the categories have the same statute of limitation. That is to say that the statute of limitation for all categories of debt in Texas is four years. In other words, the statute of limitation for orals contracts, written contracts (an example is medical debts), promissory notes (mortgages and student loans), and open-ended accounts (credit cards, in-store cards, and lines of credit) is 4 years.
When does the clock on the Texas statute of limitation begin?
In Texas, the statute of limitations clock begins on the last day of payment. The day you made your last payment on that account. This is also called the Date of Last Activity or DLA. For instance, if the last time you made payment on your debt is May 5, 2013, the statute of limitation expires on May 5, 2017. The last date is important since it is up to the debtor to prove that the statute of limitation has expired. If the statute of limitation expires on a debt, the debt is considered time-barred. Some debt collectors can decide to sue debtors even though the statute of limitation has expired. If the debtor is unable to prove that the statute has expired, the debt collector will get a judgment to force the debtor to pay what they owe.
You can always verify the date of your last activity through your consumer report. You can also request a certified letter from your debt collection agency. Alternatively, you can place a call to the debt collection agency and then you will record the call to keep a record of the date of last activity. The law demands that the debt collector tells you the truth about the debt. If it is time-barred, they are obligated to tell you.
Can the date of the last activity be reset?
Yes, there are instances where the clock will begin again. For instance, if you do not make payments for a long time, the clock will start. It will reset the moment you make payment to that account. Once you make payments, your account becomes active again. Then the clock will start counting to the four years again.
There are other instances that can set the clock. If your debt is time-barred, be cautious of the things to say or sign with the debt collector. This is because the debt collector may issue a document that acknowledges the validity of the debt. When you sign such documents, the debt will still be valid and you will be obligated to pay it. Signing that document means that you are admitting that the debt is valid even though it is time-barred. This is the same as extending the statute of limitation or reviving the debt. When this happens, the statute of limitations will reset from when you default on the payments under the new agreement.
What can be done when a creditor threatens a lawsuit against a debtor even though the debt is time-barred?
If a creditor threatens a legal action for a debt that is time-barred, he or she is violating the federal Fair Debt Collection Practices Act (FDCPA). Unfortunately, this cannot be known by the court since they do not track statute of limitations. If you are able to prove that the statute of limitation has expired, you will be able to clear the lawsuit. If the debt collector files the suit, you should first respond to the suit, if you do not respond, the court will grant a default judgment. When that happens, you will not be able to prove that the debt is time-barred. Hence, you will first respond and then you get the services of a consumer law attorney.
Facts about debt collection that debt collectors will not tell you.
- Your secret is safe with them. They cannot go about telling people about your debt even if the person is a close relative or friend. The FDCPA states that they can only contact a third person regarding your debt if they need to contact and they are unable to do so. Even with that, they are not supposed to discuss your debt with the third party. Once they locate you, the communication with the third party should cease.
- If your employer is uncomfortable with their calls, they need to stop calling you at work. Their constant calls cannot make you lose your job or make you constantly distracted. Once you tell them that it is inconvenient for you to receive such calls and messages at work, they need to only contact you after work.
- They can only sue you before taking other actions. The debt collector will need a judgment before they garnish your wage, go after money in your bank account, or get money from your bank account. If a debt collector threatens any of these when they have not said anything about going to court, it is not possible. It is illegal to do any of these without a judgment.
- You are also not under any obligation to pay the debt of a deceased relative unless you a co-signer to the credit. If the person is left an estate, the creditor may get the chance to get the money back. If not, they cannot force it on you because you are a relative of the deceased.