Texas Credit Card and Specific Laws

By: EconomyWatch Content Team   Date: 27 January 2010

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One of the interesting facts about a Texas credit card account and the way in which debt is collected is that this state imposes some very strict laws that actually protect the cardholder.  While many states have relaxed collection policies, those in Texas are tough.  In fact, if a person has a card but due to lack of payment a civil judgment has been filed, very specific restrictions would apply in how collections for that Texas credit card account could be handled.

Typically, when a cardholder does not pay money due on a credit card in most states, creditors would be able to garnish wages, as well as other forms of income.  However, for people in this situation associated with a Texas credit card account, creditors by law cannot track people down and demand payment.  Interestingly, legal options for collecting on credit card debt in this state are limited.

As mentioned, when someone has a Texas credit card account and they have fallen behind on payments, creditors are not allowed to garnish any type of income whereas the normal amount creditors would take out in other states is 25%.  For the state of Texas, only one type of debt can legally be garnished, which is child support that has fallen behind.  For this reason, Texas is often referred to as the “judgment proof state.”

Another advantage the law provides for people with a Texas credit card account is that a personal home cannot be taken nor can a lien be placed against it.  In this state, a person’s home would only be at risk for a lien being filed is if the mortgage payments are past due or if the homeowner owes money to a contractor, the IRS for federal income tax or ad volorem, or if an equity loan had defaulted.

Anyone who has experienced harassing phone calls from credit card companies or outside collectors knows the stress this creates.  However, for people with a Texas credit card account, only one collection method exists.  For this, the credit card company could garish the cardholder’s bank account but only post-judgment.  In the case of the individual not having a bank or credit union account, the creditor has no recourse, which means from a legal standpoint, enforcing a civil judgment to get past due money on a Texas credit card account would not happen.

People that have a Texas credit card account are also protected in this state from those harassing phone calls.  In this case, the federal government has a law known as the Fair Debt Collection Practices Act, which states that credit card companies are not allowed to engage in any illegal process for collecting debt.  This Act also covers harassments and even threats, whether by phone or by mail.

If someone has a Texas credit card account and for one reason or another has fallen past due on payments, if that person were to receive illegal collection methods by the issuing company or any third-party working as a representative of the credit card company then the actions should be reported.  The cardholder would get in touch with someone at the Texas Attorney General’s Consumer Protection Hotline or if preferred, call the hotline for the Office of Consumer Credit Commissioner.

Keep in mind that to be approved for a Texas credit card account is often tougher than in other states but because the people who are being approved are trustworthy, the need for collections is lower than other states.  Of course, if someone has a Texas credit card account that is in the arrears, just because this state has numerous methods of protection in place does not mean the cardholder is not responsible for the debt.


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