Texas Debt Collection Exemptions

Not only are things "Bigger and Better in Texas", so is protection from debt collectors!

don't mess with texas Living in Texas (I grew up in Dallas) has a lot of advantages, but none as important as protection from debt collectors.

If you are facing overwhelming problems with too much debt and you are fortunate enough to be a Texas resident, then you have certain protection from creditors and debt collectors that other states do not offer!

 

 

For the sake of this article, I'm talking about UNSECURED DEBTS, such as:

  • Credit Cards
  • Store Credit Cards
  • Personal Loans
  • Private Student Loans
  • Medical Bills
  • "Pay-Day" Loans

When you can't make at least the required minimum payments on your unsecured debt, and miss a payment or two, here's what usually happens:

First, the original creditor (Visa, Master Card, US Bank, etc.) will most likely give you a call and send a letter reminding you that your account has become delinquent.  Sometimes the language is very...let's say, "firm or somewhat threatening".  Something like:

Dear Mr. So-n-so:

Your account with XYZ company has become seriously delinquent.  Missing payments on your account can have a negative effect on your credit report.  We understand that you may be facing a difficult time and want to work with you on this matter. 

Please give one of our customer service representatives a call to discuss your options. It is imperative that you bring your account current as soon as possible, to avoid legal action.


OK, so what do you do? 

If you think you will be able to get your account caught up, then give them a call to see what can be done.  Sometimes the creditor is willing to forgive late fees and other penalties if you can bring your account current.

But what if you know you can't "bring your account current"?

It has been my experience, that most people who need help with their debts are not someone who just "over-spent" foolishly.  They are people just like you and me who got into trouble. It's important to know how this process works so that you (or someone you know) is not taken advantage of by a debt collector.

There are all kinds of reasons why people get in trouble with their credit:

  • Loss of employment
  • Loss of a spouse or partner
  • Prolonged illness
  • Disability
  • Retired and on a fixed income not quite enough to keep up!
  • and many other reasons that are beyond your control!

 

After the original creditor has made many attempts to contact you by both phone and mail, they may decide to write-off or charge-off your account and transfer or sell to a debt collector.

Now the DEBT COLLECTOR starts sending "nasty" letters and making call after call!

STOP Collection Calls Free Sample Letter

If you have only missed a payment or two, and have the means to get caught up, I think it is a good idea to contact your original creditor to discuss trying to bring your account current. 

But, I do not believe it is your best interest to call a debt collector.

There are those that disagree with me on this, but my experience in dealing with debt collectors over many years has taught me that they only have one job and that is to get as much money in the shortest period of time.

They don't really care about your situation and for the most part are not sympathetic at all.  In fact, I had one of my retire clients who had also lost her husband of over 50 years tell me that a debt collector told her that she should go get a job and quit making excuses for her debts.  Really?  72 years old and a widow!  And not only that, rather than file for bankruptcy protection as she could have, she has chosen to settle as many debts as possible.

Many debt collectors are fine, professionals and you can work with them. But some are, well... you know!  So, my advice is not to try and call to explain your situation, especially if you live in Texas!


What happens if a debt collector takes LEGAL ACTION?

A debt collector has the option to FILE A COMPLAINT in your county's court.  This is a legal option they can use in order to scare or force you to pay your debt.

Once the COMPLAINT is filed, you will receive a SUMMONS.  The summons will state that the PLAINTIFF (that's the credior or debt collector) CLAIMS that you owe this debt.  It will also state that you have 30 days (some state 20 days) from the receipt of this summons to file an ANSWER.

An ANSWER is a legal brief explaining why you legitimately do not owe this debt.  There is usually a cost to file the ANSWER, and most likely you will need an attorney to file it so it is in the proper "legal" form. About 99.9% of the time, you owe the debt, so there is no need to dispute it.  The key is to know how to handle it.

I've written several blogs over the years explaining what to do if you recieve a summons.  If you live outside of Texas, I would encourage you to not only read about your options, but you will need to take action.

But hey, ya'll...if your a Texas resident, I've got good news!

The purpose of filing the claim is to get you to:

1)  Take action to pay your debt out of fear of what may happen if you don't!

2)  The debt collector hopes to be awarded a JUDGMENT, so they can either GARNISH YOUR WAGES, place a LIEN ON YOUR HOME or even LEVY YOUR BANK ACCOUNT.

In the great state of Texas, you have laws that protect you from creditors like few other states. 

Your wages cannot be garnished for unpaid, unsecured accounts, but even in Texas, they can be garnished for child support or alimony, unpaid taxes and defaulted student loans, so be advised!

Your home is also protected from a lien with a wonderful Texas Homestead Protection!

Although there a some restrictions to the homestead law, basically it means that a creditor cannot apply a lien against your property for unpaid, unsecured debts.

So, your wages and home are protected in Texas, what about your bank account?

As in all states, if your only source of income is from Social Security and/or a Retirement Plan or Fund, Disabily Income, etc. and those monies are directly deposited in your bank account, THEY ARE EXEMPT FROM GARNISHMENT OR LEVY.

HOWEVER, although your wages are exempt in Texas, once they are deposited in your bank account, they would be subject to a garnishment or levy (after a judgment is awarded to the creditor)!

I advise any client who has earned income to NOT DEPOSIT to your bank account with a judgment against you!  I know it can be a hassle, but think about what it would be like to start bouncing checks on Monday after your bank account was FROZEN over the weekend!

Bottom line for all of you Texas Residents:

  • Your home (including a mobile or manufactured home) is exempt from a LIEN
  • Your wages are exempt from garnishment
  • But, you need to take caution with your bank account!

 

Photo credit: 

https://www.flickr.com/photos/tomjmac/3695294596



Tags: debt collection, credit card debt, debt settlement in Texas, exemptions, can a creditor levy my bank account, can social security be garnished, can a debt collector garnish retirement income, debt collection in texas, debt relief in Texas, exemption from garnishment

Everything is Bigger in Texas, Including Debt Settlement!


If you live in Texas, you have special protection under the law concerning debt collection.  Debt Settlement in Texas has advantages!

texas flag at longhorn game

 

 When a debt collector decides that they cannot collect on a delinquent debt, they may decide to FILE A CLAIM and a SUMMONS will be issued to the DEFENDENT, the person who owes the debt.

In most cases, the DEFENDENT (you), owes the debt, so there is no need file an ANSWER or to appear in court.

An "ANSWER", is a legal statement that you do not owe the debt and why the CLAIM is invalid.  Sure, you object to the outrageous interest, fees and penalities tacked on the original balance, but you agreed to that when you signed that credit card application...sorry!

So, if you don't do anything about the SUMMONS, and I certainly DO NOT ADVOCATE THAT, then the PLAINTIFF (the filer of the claim and owner of the debt), will be awarded a JUDGMENT.

NOW WHAT?????

If an agreement (SETTLEMENT or STIPULATTED AGREEMENT) cannot be negotiated, then the PLAINTIFF most likely will apply for a WRIT OF GARNISHMENT.  In most states, this will force an employer to send 25% of your net "take-home-pay" (after any state, federal or other withholdings have been deducted from your paycheck).

While this is true in most states, the good news for all of you Texans is that Texas has laws that prohibits most creditors from any wage garnishment!

Notice I said "most creditors" and not "all creditors. 

Texas does allow for wage garnishment for debts such as:

  • Unpaid income taxes
  • court ordered alimony and child support
  • defaulted student loans

One more thing, if you earn wages from an "out-of-state" employer, these wages most likely WILL NOT be exempt from wage garnishment.

For more information about Texas Law and Wage Garnishment, visit:

                                Debt Collection in Texas

So now you understand that for most unsecured debts, Texas will not allow wage garnishment.

                       WHAT ABOUT A BANK LEVY IN TEXAS?

In other words, can a debt collector levy (get the bank to send them your money!) your bank account for unpaid debts???

YES!

Just because a creditor who has been awarded a judgment cannot apply for a writ of WAGE GARNISHMENT, doesn't mean that they cannot (and most likely will) apply for WRIT OF LEVY from your bank!!!

Therefore, you should be making every attempt NOT TO HAVE A JUDGMENT GRANTED in favor of you creditor (or debt collection agency)!

How can you do that?

Contact your creditor(s) as soon as you are having a problem keeping up with your payments.  They may help you get caught up or arrange for you to lower your payments for a while until you get back on your feet financially.

If you know that because of loss of employment or some other catastrophic financial issue that you not only cannot keep up with your payments and it is unlikely that you'll be able to make any payments for a long time, then you need to try and negotiate a SETTLEMENT.

DEBT SETTLEMENT is a method whereby you and the creditor agree on an amount (usually much less than the balance that you owe) that will be paid either in a lump sum or in payments.

DEBT SETTLEMENT is possible to do on your own, but after helping people for over 10 years now, it is very TIME CONSUMING and can be EMOTIONALLY AND PYSICALLY EXHAUSTING!


Please download our FREE e book below:

FREE EBook Debt Settlement  Basics

If after reading the basics about DEBT SETTLEMENT, you feel that you could use some help, just let us know.  We'll be glad to talk with you to see if you qualify for the DEBT SETTLEMENT PROGRAM, and this consultation is...

FREE, with NO OBLIGATION WHATSOEVER!

To summarize:

  • Your wages are exempt from garnishment in Texas
  • Other debts, such as, income taxes, alimony, child support and Federal Student Loans are not
  • You BANK account IS NOT EXEMPT from LEVY after a JUDGEMENT has been awarded, but,
  • YOU CAN AND DO HAVE OPTIONS

 

 

 

photo by Tiffany

 

Tags: wage garnishment, debt, Texas, debt settlement in Texas, debt collector, exemptions, bank levy