The Statute of Limitations in Debt Lawsuits

Texas Laws Against Aggressive Debt Collection

When it comes to debt collection, consumers have a variety of options to protect themselves against unlawful debt collectors. A 2019 law in Texas strengthened the rights of consumers against debt collection and maintained the state’s short statute of limitations. A statute of limitations is the amount of time a company or person has to pursue legal action against another. If enough time has passed, then the statute of limitations means that companies can no longer sue people for their debts. Luckily, Texas has laws on the books to protect people against debt and the laws are in the favor of the consumer. With the help of an attorney, there are ways to overcome these lawsuits and defeat the creditors. 

When people receive letters or summons in the mail about old debts, it can inspire fear and panic. A person in debt may still be in a position where they are unable to resolve the debt and the collection attempts can bring up trauma. In the case of old debts, or what some people call zombie debts because of how companies never ceased to collect on them, companies can still aggressively attempt to collect on the debt. However, as a response to this, many states like Texas implement a statute of limitations to protect citizens who still cannot pay. 

What is the Texas Statue of Limitations? 

If one faces credit card debt in Texas, the company only has four years to collect the debt. This means that if any corporation is trying to collect an outstanding debt that has not been paid in four years, then it is a breach of contract. While the promise to pay is broken by the debtor, four years of nonpayment on debt usually indicates extreme hardship. When a contract has been breached, then it is broken and beginning collections again is an illegal activity. It violates state law for companies to pursue this debt. According to Section 16.004 of the Texas Civil Practice and Remedies Code, the statute of limitations is only four years. Therefore, a company trying to collect on any Texan after four years is breaking the state law and can take retaliatory legal action as well as ignore the collection attempts. 

It is also important to remember that this 2019 law also included a Section that introduced the idea of time-barred debt. Once the statute of limitations has passed on the debt in Texas, then collectors cannot chase consumers for it. The old debts are considered time-barred, which means that they are off-limits. In some states, companies abuse their consumers by frightening the individuals into promising to pay their debts or even acknowledging the debts. This is a trick to allow the company the right to restart the clock on collections and continue harassing the person into payment. 

Avoiding Illegal Collection Restarts and Other Rights

Luckily, Texas law contains provisions that outlaw companies from restarting the debt. The statute of limitations is four years since the date of the breach which is generally about 30 days after the last time someone paid the debt. Even if you attempt to pay the debt at one time, they can no longer threaten you with legal action. Although you may still owe the debt on the books unless you file for bankruptcy or settle with the company, they lose their most powerful weapon of intimidation thanks to powerful Texas laws that protect vulnerable consumers.

The company can no longer threaten to sue you and forcibly collect the debt through a lawsuit before you can organize your finances. In essence, the bank cannot force you to settle the debt before you are ready and cannot drag an individual into court when it is clear the individual cannot pay. 

Going into debt itself can be one of the most difficult things about adult life. On top of that, people are often overwhelmed by credit laws and collection practices that seem constant, irritating, and intimidating. If you need legal protection or want the advice of a lawyer, contact our firm today and get started.