If you owe a debt to someone, they have a few different ways of collecting on it. This page will explain some of the common ways that creditors and debt collectors will try to collect on a debt.
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Filing a Lawsuit | Exempt Property|| Repossession | Judgment Liens
Filing a Lawsuit
If contacting you to get you to pay the debt has not worked, the next step for a debt collector is to file a lawsuit. The debt collector has a certain amount of time to file the suit, called the "statute of limitations." In Texas, the statute of limitations for debt is 4 years. After that time passes, they can no longer file a lawsuit to collect the debt.
If the creditor or debt collector wins the lawsuit, they will obtain a judgment against you. That judgment can then be enforced in a variety of ways unless you do not have any money or assets that the creditor could claim. This is commonly called being "judgment proof."
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Section 16.004 of the Texas Civil Practice and Remedies Code
The statute of limitations on debt in Texas is four years.
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What should I do if a creditor or debt collector sues me?
The Consumer Financial Protection explains the steps you should take if you have been served with a lawsuit for an unpaid debt.
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What is a statute of limitations on a debt?
This page from the Consumer Financial Protection Bureau explains the concept of the statute of limitations and how it relates to debt.
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What does it mean to be "judgment proof"?
If you do not have any assets that are not exempt from seizure, such as your primary place of residence, household items, your car, and the tools of your trade, someone who has obtained a judgment against you may be unable to collect on it.
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When a Debt Claim Case Has Been Filed Against You
If you have been sued by a creditor, the forms compiled on this page by the Texas Justice Court Training Center may be useful in responding to the lawsuit.
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If a judge grants a creditor the ability to seize property for the payment of a debt, this notice alerts the debtor of their rights to claim an exemption.
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This form will allow a debtor who has been ordered by a court to repay a debt to ask that certain property be exempted from seizure to pay the debt.
Exempt Property
Certain types of money and property are protected in a debt collection lawsuit and cannot be taken by the creditor. Texas court rules require the debtor be provided with notice about their protected property rights.
If a creditor takes protected property, a debtor can take legal action against them to get it back.
Article 16, Section 50 of the Texas Constitution
State constitutional law providing protections for property with a homestead exemption from forced or unauthorized sale for payment of certain debts.
Texas Property Code, Chapter 41
This chapter of the Texas Property Code defines "homesteads" and other land exempt from seizure.
Texas Property Code, Chapter 42
State law that governs the types of personal property that are exempt from garnishment, attachment, execution, or other seizure.
Rule 679b of the Texas Rules of Civil Procedure
Court rule requiring the the creditor or turnover receiver to provide notice to the debtor when a post-judgment order results in the freeze or seizure of personal property.
Created by the Texas Justice Court Training Center, this deskbook covers procedure in civil cases in justice court. Chapter 10, Section L discusses exempt property.
What property can be protected from judgment creditors? (TexasLawHelp.org)
An article from TexasLawHelp.org that discusses the type of property that is exempt from being taken by creditors in a debt collection lawsuit.
What does it mean to be "judgment proof"?
An article from TexasLawHelp.org discussing how a person could be seen as "judgment proof" if their property or income cannot be seized by a creditor to pay for a debt.
Exempt Property in Debt Collection
A toolkit from the website TexasLawHelp.org containing the form as well as instructions for a debtor to file to request the return of exempt property.
Wage Garnishment & Writs of Garnishment
Wage garnishment is something that people commonly think of as a way for debt collectors to take the money that they owe. In Texas, wage garnishment is prohibited by the Texas Constitution except for a few kinds of debt: child support, spousal support, student loans,or unpaid taxes. A debt collector cannot garnish your wages for ordinary debts.
However, Texas does allow for a bank account to be frozen. Once your wages are deposited into your bank account, the funds can be frozen and possibly seized. In order to do this, a debt collector must have won the lawsuit and had an order issued by the court. This can be confusing because the orderis called a "writ of garnishment" but it still cannot be used to take incoming wages.
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Texas Constitution, Article 16, Section 28
This section of the Texas Constitution prohibits wage garnishment except for child support and spousal maintenance.
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Texas Civil Practice and Remedies Code, Chapter 61
This chapter discusses the writ of attachment, which allows a creditor to place a claim on a debtor's assets, including funds in a bank account, while a suit over the debt is going on.
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Texas Civil Practice and Remedies Code, Chapter 63
This chapter of Texas law discusses the procedure for a writ of garnishment for an unpaid debt. Section 63.004 exempts current wages from writs of garnishment.
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Legal publisher Nolo explains the laws in Texas concerning wage garnishment.
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Writ of Attachment in Debt Collection
This article explains what a writ of attachment does and how it can be used in a debt collection lawsuit.
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This article from Nolo, a legal publisher, explains when banks or other creditors can put a freeze on your bank account due to unpaid debts. It also lists steps you can take if this happens to you.
Repossession
If a piece of property is put up as collateral for a loan, this is called a "secured transaction." The collateralmay be repossessed if the debtor does not pay as they are supposed to, even without a court order.The information below explains when property may be repossessed for unpaid debts.
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Repossession: What Creditors Can and Can't Take
This page from Nolo explains what a debt collector can and cannot repossess if you owe money.
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Legal encyclopedia Wex explains what a secured transaction is and how collateral may be repossessed.
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Repossession - Vehicle or Property
This page from TexasLawHelp describes when your vehicle could be repossessed due to nonpayment of a debt, your rights in this situation, and what to do if your vehicle is repossessed.
Judgment Liens
If you own a house or land in Texas, a creditor who sues you for debt and wins can place a "judgment lien" on your real property. If you sell the property, they may be able to take themoney they are owed from the proceeds of the sale. "Homestead" property, meaning your primary place of residence, may beexempt from judgment liens.
A judgment lien in Texas lasts for ten years (unless the debt was owed to a government agency).
Texas Property Code, Chapter 41
This chapter of the Texas Property Code defines "homesteads" and other land exempt from seizure.
Texas Property Code, Chapter 42
This chapter of the Property Code exempts certain personal property, like home furnishings and tools, from seizure by creditors.
Texas Property Code, Chapter 52
This chapter describes the process for obtaining and releasing a judgment lien in Texas.
Judgment Liens on Property in Texas
This article from Nolo provides general information on judgment liens.
Judgment Liens and the Texas Homestead
Information from a private real estate attorney's website on how to release a judgment lien against homestead property.
Help! I Have a Lien on my Homestead
Written for the debtor, this information from the Houston Lawyer Referral Service discusses how to release a judgment lien against property with a homestead exemption.
FAQs: Residence Homestead Exemptions
Learn more about declaring your residence as a homestead with this list of frequently asked questions from the Texas Comptroller. It includes a form to apply for a Residential Homestead Exemption.
Section 52.0012 Resolves Few Homestead Release-of-Lien Issues
This 2011 article from the Texas Lawyer discussing the complications that arise when a creditor tries to place a judgment lien on an exempt homestead property.
