WHAT DEBTORS NEED TO KNOW ABOUT DEBT COLLECTION

Credit card issuers and their debt collectors have a certain amount of time within which they may legally collect on their debts. This time period is called the statute of limitations. In Texas, the statute of limitations to collect on an open account Is four years from the date of the last payment on the account. However, the four year statute of limitations may unknowingly be extended by a debtor if the debtor makes a payment on his or her account, even if it is a nominal amount such as twenty dollars, or if the debtor makes a promise to pay to the creditor. In such a case, the statute of limitations is reset for another four years from the date the last payment was made or from the date of the promise to pay.

Under Texas law, a debtor has the right to request that the creditor verify or validate the debtor’s debt if the debtor has been contacted by the creditor. The debtor should mail the creditor his debt validation request by certified mail, return receipt requested and request that the creditor respond in writing. Debtors should also know that many debts are sold by creditors to various third party debt collectors. If it is a third party debtor collector who is attempting to collect on the debt, they must be able to prove that they are the legitimate owner of the debt. The third party debt collector must also provide the debtor with specific information about the debt which verifies or validates the debt on which they are attempting to collect payment.

Pursuant to the Fair Debt Collection Practices Act, 15 U.S.C. §1692G(a), within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing –

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

 

Pursuant to Texas Finance Code, §392.202(b),the third party debt collector has thirty (30) calendar days to respond to a debt validation request by sending a written statement to the debtor, either denying the inaccuracy; admitting the inaccuracy; or stating that the third party debt collector has not had sufficient time to complete the investigation of the inaccuracy. And, pursuant to Texas Finance Code, §392.202(c), if the third party debt collector admits that the item is inaccurate, they shall not later than the fifth business day after the date of the admission, correct the item in the relevant file and immediately cease collection efforts. Failure by the third party collection agency to comply with the debt collection statute subjects the third party debt collector to certain civil and criminal penalties.

            

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