Texas Debt Collection Laws: Deadlines, Exempt Property, and Your Rights

Texas debt collection laws give consumers some of the strongest protections in the country: your paycheck cannot be garnished for credit card or medical debt, your home is shielded from forced sale by unsecured creditors regardless of its value, and a four-year deadline blocks most collection lawsuits once it passes. Collectors still have real tools once they win a court judgment, so knowing where the lines fall matters on both sides of a collection notice.

The rules come from two main places. Chapter 392 of the Texas Finance Code governs debt collection inside Texas, and the federal Fair Debt Collection Practices Act layers on top.¹² Where they overlap, the law more protective of the consumer controls. A separate federal rule, Regulation F, sets specific limits on call frequency and electronic messages.³

What a Collector Cannot Do

A collector cannot threaten violence, criminal prosecution, or seizure of property it has no legal right to take. Consumer debt is a civil matter in Texas. You cannot be arrested for unpaid credit cards or medical bills, and a collector who says otherwise is breaking the law.

Harassment is also off limits. That includes repeated calls meant to annoy, profane language, and publishing a debtor’s name on any kind of “deadbeat” list. Under Regulation F, a collector is presumed to be harassing you if it calls more than seven times in seven consecutive days about the same debt, or calls you within seven days after a phone conversation about that debt.³ Calls before 8 a.m. or after 9 p.m. in your local time zone are prohibited whether they come by phone, text, or email.

Collectors cannot misrepresent the debt or themselves. They cannot lie about the amount owed, pose as attorneys or government officials, send papers designed to look like court documents, or misstate the legal consequences of not paying, including bluffing about wage garnishment that Texas law does not allow.⁴

Discussing your debt with other people is heavily restricted. A collector may generally only communicate about the debt with you, your spouse, your attorney, or a co-signer. Contact with anyone else is limited to locating you, and even then the caller cannot say the call is about a debt.² If you have a lawyer, the collector has to route communication through the lawyer.

When a collector uses email, text, or social media, it has to include a simple opt-out method for that channel, and it cannot charge you or ask for extra information to honor the request.⁵

Your Rights When a Collector First Reaches Out

Within five days of first contacting you, a debt collector must send a written notice showing the amount of the debt, the name of the creditor, and a statement that you have 30 days to dispute it. If you do nothing during that window, the collector can treat the debt as valid.²

Send a written dispute inside those 30 days and the collector has to stop all collection activity until it mails you verification of the debt or a copy of any judgment. That is one of the most useful tools you have. Debts that have been bought and resold often lack the paperwork needed to prove them, and a verification request can bring that problem into the open.

You can also send a written letter telling a collector to stop contacting you. Once received, the collector can only reach out to confirm it is stopping or to tell you it plans a specific legal step such as a lawsuit. The letter does not erase the debt. It ends the phone calls.

The Four-Year Deadline to Sue

Texas gives creditors four years to file suit on most consumer debts, including credit cards, personal loans, and medical bills.⁶ The clock starts on the date the cause of action accrues, generally the last missed payment or the date the account defaulted.⁷

Once four years pass with no suit filed, the debt is “time-barred.” It still exists, and a collector can still ask you to pay, but you have a complete defense if the creditor sues. You have to raise that defense yourself by filing an answer. A judge will not throw the case out on your behalf.

A 2019 change to Texas law closed the old “zombie debt” trap. Making a partial payment or signing something acknowledging an old debt no longer restarts the four-year clock.⁶ If a collector pressures you into a small “good faith” payment on a decade-old account, that payment does not reset the deadline in Texas.

One boundary worth naming: the four-year window has nothing to do with your credit report. Under the Fair Credit Reporting Act, most negative items stay on your report for seven years from the first delinquency, and a judgment can remain for seven years or until the statute of limitations expires, whichever is longer.⁸ A time-barred debt can still weigh on your credit score.

Wages Are Off Limits, but Bank Accounts Are Not

Texas Property Code Section 42.001 makes current wages for personal services completely exempt from garnishment for consumer debts.⁹ Credit card issuers, hospitals, and personal lenders cannot touch your paycheck. The narrow exceptions are court-ordered child support, spousal support, certain federal tax debts, and defaulted federal student loans. Child support and alimony can reach 50% or 60% of disposable earnings depending on whether you support another family, and federal student loan garnishment is capped at 15%.¹⁰

The protection has a gap that catches people off guard. Once your paycheck hits your bank account, a creditor holding a court judgment can garnish that account. Exempt funds keep their exempt status after deposit, but the burden falls on you to prove which dollars came from wages, Social Security, veterans’ benefits, or workers’ compensation. Keeping exempt income in a separate, clearly labeled account makes that proof much easier if garnishment hits.

Property a Creditor Cannot Take

Your Home

Your primary residence is protected from forced sale to satisfy most debts, with no cap on the home’s dollar value. The limits are on land: up to 10 acres in an urban area, or up to 200 acres for a family (100 acres for a single adult) in a rural area.¹¹ A creditor holding a million-dollar judgment on credit card debt cannot force the sale of your homestead whether it is worth $150,000 or $1.5 million.

The exceptions are debts tied to the property itself: the mortgage, property tax liens, home equity loans, and debts for improvements contracted in writing. If you sell the home, the proceeds stay exempt from seizure for six months after the sale.¹²

Personal Property

Texas exempts personal property up to $50,000 in aggregate fair market value for a single adult and $100,000 for a family.⁹ Protected categories include home furnishings, clothing, tools of the trade, farm animals, and vehicles. Value is calculated after subtracting liens, so a car with a loan against it counts only at its equity value.

Retirement Accounts

401(k) plans, pensions, traditional and Roth IRAs, and similar tax-qualified accounts are fully exempt from creditor seizure with no dollar cap. The protection applies under both Texas and federal law, so it survives bankruptcy too.

If You Are Sued

The most consequential thing you can do when a creditor sues is file a written answer with the court on time. In justice court, where many smaller debt cases end up, the answer is due within 14 days of being served. In district or county court, the deadline is generally the first Monday after 20 days from the date of service. Miss the deadline and you typically get a default judgment: the court awards the creditor everything it asked for, and you lose the chance to raise defenses like the statute of limitations or a wrong balance.

Default judgments are the single biggest pitfall in these cases. Many people ignore the lawsuit assuming nothing bad happens, or because they know they owe the money and think fighting is pointless. But a judgment is not just confirmation of the debt. It opens the door to bank account garnishment, property liens on non-homestead assets, and interest that keeps growing.

Post-judgment interest in Texas is tied to the prime rate published by the Federal Reserve, with a floor of 5% and a ceiling of 15% per year, applied to the full judgment including costs. On a $10,000 judgment at a 7.5% rate, that is another $750 per year. Texas judgments stay enforceable for 10 years and can be renewed, so silence does not make one go away.

When the Collector Breaks the Law

Sue under Texas Finance Code Chapter 392 and you can get injunctive relief to stop the illegal behavior plus actual damages. If you win, the court must award reasonable attorney’s fees and costs.¹³ The mandatory fee award matters because it makes lawyers willing to take cases where the actual out-of-pocket harm is small.

The FDCPA is a separate path. An individual can recover actual damages plus up to $1,000 in statutory damages per lawsuit, along with attorney’s fees and costs.² You can bring claims under both Texas and federal law at the same time if the same conduct violated both.

Third-party debt collectors and credit bureaus operating in Texas must file a $10,000 surety bond with the secretary of state before they can collect.¹⁴ If a collector violates Chapter 392 and cannot pay a judgment, the bond is available to cover damages.

The Tax Bill After Forgiven Debt

When a creditor cancels $600 or more of your debt, it must report the canceled amount to the IRS on Form 1099-C, and the IRS treats canceled debt as taxable income.¹⁵ Settle a $5,000 credit card balance for less, and the forgiven portion may be taxed as though you earned it.

Two exclusions cover most people. Under the insolvency exclusion, if your total debts exceeded the fair market value of your total assets when the debt was canceled, you can exclude the canceled amount up to the extent of your insolvency.¹⁶ Debt discharged in bankruptcy is also fully excluded. Either one requires filing IRS Form 982 with your return.

The exclusion for forgiven mortgage debt on a primary residence, up to $750,000, was available through 2025 and is not available for debt discharged after December 31, 2025.¹⁷ If you settle a mortgage deficiency in 2026 or later, the forgiven amount is taxable unless insolvency, bankruptcy, or another exclusion applies.

1
Justia. Texas Finance Code Title 5 Chapter 392 – Debt Collection
2
Federal Trade Commission. Fair Debt Collection Practices Act
3
eCFR. 12 CFR Part 1006 – Debt Collection Practices (Regulation F)
4
State of Texas. Texas Finance Code Section 392.304 – Fraudulent, Deceptive, or Misleading Representations
5
Consumer Financial Protection Bureau. Regulation F Section 1006.6 – Communications in Connection With Debt Collection
6
Texas State Law Library. What Is the Statute of Limitations on Debt?
7
State of Texas. Texas Civil Practice and Remedies Code Chapter 16
8
Consumer Financial Protection Bureau. How Long Does Information Stay on My Credit Report?
9
U.S. Bankruptcy Court, Southern District of Texas. Texas Exemption Chart
10
U.S. Department of Labor. Fact Sheet 30 – Wage Garnishment Protections of the Consumer Credit Protection Act
11
State of Texas. Texas Property Code Section 41.002 – Definition of Homestead
12
State of Texas. Texas Property Code Section 41.001 – Interests in Land Exempt from Seizure
13
State of Texas. Texas Finance Code Section 392.403 – Civil Remedies
14
State of Texas. Texas Finance Code Chapter 392 – Debt Collection
15
Internal Revenue Service. Instructions for Forms 1099-A and 1099-C
16
Internal Revenue Service. Topic No. 431 – Canceled Debt, Is It Taxable or Not?
17
Internal Revenue Service. Publication 4681 – Canceled Debts, Foreclosures, Repossessions, and Abandonments