1. Will I have to pay extra because the debt is with a collection agency?
A third party debt collector cannot attempt to collect more than the amount owed. Interest and fees or other charges must be authorized by the agreement creating the debt or permitted by law. You should review the agreement you have with the creditor to determine if interest charges, late fees or attorney fees are included in the agreement.
2. When can a collection agency call me?
A collection agency may presume that it is convenient to call you between 8 a.m. and 9 p.m., local time at your location. If these times are inconvenient, you should ask the agency to contact you at other times. There is no law that specifically limits the number of calls an agency may make to you, but repeated calls over a short period, which may be annoying or harassing, are prohibited.
3. What should I do if contacted by a collection agency?
It is important that you respond as soon as possible. If you don't, the collection agency will keep trying to contact you to collect what they believe is a valid debt. If you legally owe the debt, you should make payment arrangements.
4. What is the difference between a third party debt collector and a creditor collecting on its own behalf?
Sometimes consumers confuse third-party collectors (collection agencies) with the in-house collection department of a creditor. Professional debt collection services are third-parties to the transaction that created the debt and are collecting for the creditor. Third party debt collectors are regulated by the federal Fair Debt Collection Practices Act and in Texas, the Texas Debt Collection Practices Act (Chapter 392, Texas Finance Code).
5. What if the bill has been paid, I don't owe the debt, or I'm not the person the collection agency is looking for?
If you do not owe the bill, or if the bill has already been paid, send the agency a written explanation along with copies of receipts, canceled checks and any other information to back up your claim. If you are questioning only a part of the debt, you must make arrangements to pay the rest of the debt.
If you are not the person the agency is looking for, write and explain the mistake. If you are unsure about your legal responsibility for a debt, consult with an attorney.
In these situations, is important to dispute the debt in writing within 30 days after receiving the validation of debt notice. (See question #4). Upon receipt of a timely written dispute, the debt collector must cease collection efforts until verification of debt is mailed to you.
In some cases, the collection agency may be unable to obtain verification that you owe the debt and will return your account to the creditor and stop further collection efforts. The agency is not required to notify you if the account is returned.
6. What if I dispute the accuracy of the bill? What can I do?
You should send the collection agency a written notice that you dispute the bill. If you notify the debt collector of your dispute or request verification of debt within 30 days of receiving the validation of debt notice described above, the collection agency must stop all communications with you upon receiving your timely written notice, but may resume contact with you once the verification of the debt is obtained and mailed to you.
7. What if I can't keep the payment arrangements I agreed to?
If possible, contact the agency before you miss a payment or send a partial payment and explain the problem and what you plan to do to solve it and catch up on your payments. Many agencies will work with you, especially if you have already made several payments on time.
8. What if I can't make the payment arrangements I agreed to with the collection agency?
Contact the collection agency and explain the problem. Many agencies will work with you, especially if you have a history of making payments on time.
9. What happens to my credit report when I don't pay a debt?
Your creditor may report information about your account to a national credit bureau. Information about late payments, missed payments, or other defaults on your account may be reflected in your credit report. This information is reported by credit reporting agencies for seven years from the date of delinquency. If at a later date the debt is paid, partial or in full, your credit report will be updated to reflect the payment. It should be noted that paying in full will not result in the credit item being deleted.
10. The debt collector obtained my credit report. Is this allowed?
Yes. Under the federal Fair Credit Report Act, a credit bureau may furnish a credit report on a consumer in connection with the collection of an account.
11. The collection agency wants me to write postdated checks. Do I have to do this?
You are not required to give postdated checks to a collection agency. However, the agency may request postdated checks as a method of structuring the repayment plan. Writing or accepting such checks is not illegal so long as you plan to cover them when they are cashed. If a check is dated more than five days in advance, the agency must notify you in writing at least three business days prior to the deposit of the postdated check.
12. Must the debt collector identify him or herself and inform me of the nature of the communication?
Yes. Debt collectors must provide a meaningful disclosure of their identity and the purpose of the call. In Texas, debt collectors may use their true name or a professional name (alias) while collecting debts. If a professional name is used, the debt collector must maintain a list of the professional names used. The debt collector must also inform you that the purpose of the communication is to collect a debt.
13. If the debt is from a dishonored check, will there be a service charge?
In Texas, the holder of a dishonored check or the third-party debt collector collecting the face value of the check may also collect a reasonable fee, not to exceed $30 and applicable sales tax on the fee. Failure to pay the fee can result in lost check-cashing privileges with creditors.
14. How do I find out what the bill is for?
Either in the first contact with you regarding the debt or in writing within five days after the initial contact, the collection agency must provide the following information: (a) the amount owed, (b) the name of the creditor, and (c) the process to follow to dispute the bill or receive verification of the debt. This is referred to as the "validation of debt" notice.
15. How did my account end up with a debt purchaser? Who is due the money?
It is not uncommon for creditors to sell the debt owed to them. When this occurs, your account is transferred and assigned to the new owner, the debt purchaser, who becomes the creditor owed the balance due on the account. Debt purchasers may place defaulted accounts with third party debt collector for collections.
16. How can I stop a collection agency from contacting me?
If you want to stop all contact from the collection agency you should request in writing that they do not contact you again; to cease and desist collection activity. Although not required, your letter should be sent by certified mail, "return receipt requested" so you have proof of delivery. Once the agency receives your letter, its collectors can only contact you one final time to advise collection efforts are being terminated, explain what remedies are ordinarily invoked by the creditor, or explain the remedies they plan to seek. After that, collection efforts by that third party debt collector must stop. Remember that if you request no further contact in any way, you may leave the agency with no choice but to have a civil lawsuit against you.
17. Can my home be foreclosed on or my wages garnished to pay a debt?
This depends on the nature of the debt. In Texas, a registered homestead is protected and cannot be foreclosed upon to pay a debt, except if the first or second mortgage or a home equity loan is in default. You should consult an attorney to be certain if your home or homestead is in jeopardy of foreclosure action.
Wages are generally protected, but can be garnished to pay court-ordered child support, spousal maintenance, defaulted student loans and unpaid taxes.
18. Can my bank account be garnished to pay a debt?
Where a judgment has been obtained, the judgment creditor can request the court to issue a garnishment writ. A judgment creditor can garnish your bank accounts, savings accounts and well as any non-exempt personal property of yours held by a third party. Again, you should consult with an attorney if you are sued.
19. Can I go to jail for non-payment of a debt?
No. You will not be arrested or placed in jail for non-payment of a debt. However, in Texas, following proper court proceedings, criminal penalties can be imposed for writing a check in exchange for goods or services if the check is returned for insufficient funds and remains unpaid.
20. Can I continue making payments to the original creditor to whom I owe money?
Yes. However, unless you pay the account in full, sending payments to the creditor will not stop the collection activity. Debt collectors are hired by the creditor to collect on the creditor's behalf and will continue to collect the balance due.
21. Can I be sued if I fail to pay the debt?
Yes. A civil lawsuit can be filed against you in the county where you reside. If you fail to answer, a default judgment can be entered against you. If a judgment is obtained against you, you may also be liable for court cost and attorney fees. You should consult with an attorney if you are sued.
22. Can a judgment lien be filed?
If the creditor obtains a judgment against you, a judgment lien can abstracted and filed with the county clerk. It will create a judgment lien on all non-exempt real property in the county where filed.
23. Can a collection agency contact other people and discuss my bill?
Although a third party debt collector may contact others in an attempt to locate you, he or she may not discuss your account or debt status with a third party. He or she must give his or her name, but not the name of the collection agency unless they are specifically asked for it.
24. Can a collection agency call me at work?
Yes, unless the debt collector knows or has reason to know that your employer prohibits you from receiving such communication. If you are prohibited from being contacted at work, inform the debt collector and provide an alternate telephone number where you may be contacted to discuss the account.
25. As long as I am paying something every month, doesn't the collection agency have to take my payments?
No. The agency's responsibility is to collect the debts assigned to it. The agency will want to have payments made in accordance with an agreed plan so it knows when to expect payment and when the debt is paid in full.
Southwest Collectors Association
For more information on SWCA, please contact Tom Morgan, our Executive Director