Judgment recovery businesses offer creditors with debt collection services to collect or recover their judgments. Judgment recovery businesses are also known as collection agencies or third-party credit agencies. State laws govern their legal rights. Although the Federal Trade Commission regulates these companies, states such as Texas have passed additional regulations to protect their residents against deceptive collection efforts and excessively high post-judgment interest fees. The Texas consumer protection laws apply to all counties and local jurisdictions within the state, including Dallas.
House Bill 2415
The Texas legislature signed House Bill 2415, which amended Section 304.033(c) of the Texas Finance Code. Effective August 2003, the Texas Office of Consumer Credit Commissioner must use the Federal Reserve Bank of New York's rate floor and ceiling limit regulations. Pursuant to those regulations, the Texas consumer credit commissioner must set the state's post-judgment interest cap at 5 percent or 15 percent each month. If the federal prime rate is less than 5 percent, the Texas post-judgment interest limit is set at 5 percent. However, if the prime rate exceeds 15 percent, the Texas post-judgment cap is set at 15 percent. The commissioner sets the rates on the 15th day of every month.
Homestead Protections
Judgment creditors can file writs of execution, garnishments or levy non-homestead property to collect their judgments. In Dallas, creditors can file judgment collection proceedings against Dallas' residents or against property located within the county. The Justice Courts have the jurisdictional authority to preside over civil claims not exceeding $10,000. Also known as small claims courts, the Dallas Justice Court can order a writ of execution or garnishment. However, since the Texas homestead property laws prohibit creditors from taking debtors' exempt property, most creditors will not actually be able to successfully collect or recover their judgments. In other words, the Texas homestead laws protect most property owned by residents, and most personal and real property is exempt from judgment collections.
Texas Debt Collection Act
According to the Texas Attorney General's Office, debt collectors are authorized to collect debt for creditors as third-party collection agencies, but they must comply with the Texas Debt Collection Act. Similar to its federal counterpart, debt collection agencies cannot use deceptive and abusive methods of collecting debt from Texas' residents. Debt collectors that violate the Texas Debt Collection Act or Texas Deceptive Trade Practices and Consumer Protection Act can face criminal and civil penalties. Debt collectors cannot threaten criminal prosecution against debtors who fail to pay their debts, and to legally collect from debtors, they must seek judgments against them.
Considerations
Since state laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.
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