Texas Debt Collection Laws: What You Need to Know

Sep 21, 2023

In the vast expanse of financial regulations, debt collection laws play a crucial role in ensuring both creditors and debtors are treated fairly. Whether you’re a business trying to retrieve owed funds or an individual looking for clarity on your rights, understanding these laws is paramount.

In Texas, debt collection practices are governed by the Texas Debt Collection Act, which lays out specific protections for consumers and boundaries for debt collectors. In this blog, we’ll be briefing about the provisions of debt collection laws in Texas and how partnering with First Credit Services – an omnichannel debt collection agency can better improve your prospects of recovering outstanding debts. 

Provisions of the Texas Debt Collection Act

The Texas Debt Collection Act outlines a comprehensive set of rules to ensure fair practices in the debt collection process. Among its provisions:

What Debt Collectors Can’t Do:

  1. Using Abusive Collection Tactics: Debt collectors are prohibited from:
  • Threatening violence or other criminal acts.
  • Using profane or obscene language.
  • Falsely accusing the consumer of fraud or other crimes.
  • Threatening arrest of the consumer, or repossession or other seizure of property without proper court proceedings.
  • Harassing debtors through anonymous calls or making repeated or continuous calls.
  • Making telephone calls without disclosing the true name of the caller before the charges are accepted.
  1. Using Fraudulent Collection Tactics: This includes:
  • Using a false name or identification.
  • Misrepresenting the amount of the debt or its judicial status.
  • Sending documents that falsely appear to be from a court or other official agency.
  • Failing to identify who holds the debt.
  • Misrepresenting the nature of the services rendered by the collection agency or the collector.
  • Falsely stating that the collector possesses valuable information just to discover more about the consumer.
  1. Overcharging Debtors: Collectors cannot try to collect more than the initially agreed-upon amount. However, it’s essential to note that debts can grow with the addition of fees like collection fees, attorney fees, etc.

Statute of Limitations

In Texas, the statute of limitations for consumer debts like credit card debt, personal loans, and medical bills is generally four years. Debtors can use the expired statute as a defense if collectors attempt to sue after this period.

FCS’s Comprehensive Debt Collection Services: First-Party & Third-Party Collections

Understanding First-Party Collections

First-party collections, often known as early-stage intervention, are paramount for reducing credit card roll rates, enhancing cash flow, curbing bad debt, and nurturing customer loyalty.

In essence, first-party collections refer to the preliminary actions taken by businesses or agencies to address accounts showing early signs of delinquency, all before a default happens. What’s crucial is that the outsourced agency acts as a representative of the business, seamlessly integrating with its resources and operating under the company’s name. The primary aim? Spotting early signs of financial struggles and engaging with consumers to prevent further complications. This is achieved through tailored communication, financial counseling, and payment plan negotiations.

First Credit Services (FCS) stands out in this domain. They blend effortlessly with your internal systems, ensuring that delinquent customers are engaged as part of an integrated team. Using their OmniXp platform, FCS’s agents make early connections, promptly address issues, and provide service that mirrors your in-house staff. Whether it’s reminding customers of their outstanding balance or processing payments, FCS does it with respect and efficiency. By opting for FCS’s First-Party services, you can expect increased cash flow, fewer accounts turning into bad debt, and enhanced brand loyalty.

Also read: The Importance of Early Intervention on Delinquent Accounts

Exploring Third-Party Collections

Transitioning to third-party collections implies hiring expert agencies to manage debt recovery. Unlike first-party collections that operate under the company’s name, third-party collections use the title of the collection agency. 

What are the advantages of outsourcing your third-party collections to FCS?
Businesses can harness our expertise, scalability, and resources to minimize their operational burdens and center their attention on core activities.

Moreover, as expected of a third-party collection agency, we abide by The Texas Debt Collection Act, The Federal Fair Debt Collection Practices Act (FDCPA) and other regulations ensuring effective and compliant debt collection strategies.

To know more about FDCPA, read our blog on Fair Debt Collection Practices Act: What You Need to Know

The Role of Technology in Debt Collection: Introducing FCS’s OmniXp and EngageRight

At First Credit Services (FCS), we pride ourselves on using state-of-the-art technology to enhance the efficiency and effectiveness of our debt collection practices while strictly adhering to the Texas Debt Collection Act. 


OmniXp offers consumers the freedom to choose how they interact with us, be it through email, phone, or mobile app, providing personalized and remarkable engagement.


Our EngageRight machine learning engine fine-tunes strategies to know who, when, and how to contact consumers. This optimization ensures high reach and recovery rates for our clients, all within the legal boundaries set by Texas.

Understanding Texas debt collection laws ensures a fair and just process for both businesses and consumers. First Credit Services, with its innovative technologies and expert team, offers compliant, effective, and consumer-friendly collection solutions for diverse industries.

Want to ensure your business adheres to the Texas Debt Collection Laws? Click here to learn how FCS can help.

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