Dealing with large debts can be extremely stressful and overwhelming. Creditors and debt collectors can be aggressive or even abusive when seeking repayments.

However, as a consumer, you are protected by several laws that oversee debt collection within the state. To better protect yourself from constant harassment from debt collectors, it is imperative that you understand the laws regarding Texas’ statute of limitations on debt.

What is a Statute of Limitations?

A statute of limitations is a rule that determines how long a party has to pursue legal action against another party. Each state has its own statute of limitations governing various causes of action. For instance, the statute of limitations for a personal injury case is different from the one for credit card debt.

Most personal injury lawsuits must be filed within two years from the date of injury. Meanwhile, a creditor typically has up to four years under the statute of limitations for credit card debt and other back payments.

How Long Can A Collector Legally Pursue Old Debt?

Creditors and debt collectors may file a lawsuit pursuant to Texas collection laws. Therefore, consumers are protected from harassment and abuse from creditors and debt collectors. While the law recognizes a creditor’s legal right to collect bad debts, it also protects an individual’s right to fair debt collection practices.

For instance, The Texas Debt Collection Act and the Fair Debt Collection Practices Act define creditor harassment and prevent certain actions. Additionally, creditors have limited time to file their lawsuit.

The Texas statute of limitation for debt collection is four years. If a creditor fails to file a debt collection suit before the statute of limitations expires, then a debtor has a valid defense to the lawsuit.

Can I Use the Texas Statute of Limitations on Debt as a Defense?

The statute of limitations for debt may be used as a defense in some cases. However, even if it has been over four years since a debt was incurred, the creditor may pursue collection of the debt by filing a lawsuit.

Texas debt collections laws do not prohibit a creditor from pursuing debt repayment after four years. The statute of limitations on debt collection only applies to the filing of a lawsuit.

If a creditor files a lawsuit related to old debt, you might have a valid defense by claiming the Texas debt statute of limitations has expired. Alleging that the statute of limitations for debt has expired is an affirmative defense, which means that you must assert the defense for the court to rule in your favor.

The statute of limitations may be extended in certain cases. For instance, if you begin making repayments after three years and then stop, a judge may rule that the four-year deadline for filing a debt collection lawsuit begins from the date of your last payment.

What Can I Do About Old Debt I Cannot Pay?

If you have old debts that you cannot afford to pay, you have the option of waiting until the Texas statute of limitations on debt expires.

However, even though the statute expires, your liability for the debt does not disappear. The creditor may lose the right to file their lawsuit, but you will still owe that debt.

Creditors can declare bad debts on credit reports, even though they cannot file a lawsuit to collect the debt. This can hurt your credit rating and prevent you from opening new lines of credit or obtain loans.  

Some individuals may be tempted to ignore a debt collection lawsuit because they do not have the money to pay or hire an attorney to help them with the lawsuit. However, you should never ignore a debt collection lawsuit.

By ignoring the lawsuit, you give up the right to assert certain legal defenses, including one that cites the statute of limitations on debt collection. Your time to respond to a lawsuit is also generally limited. Therefore, quick action is required to prevent a default judgment.

When you fail to respond to a debt collection lawsuit, the creditor can file a motion requesting a default judgment. In most cases, the judge grants the motion for default judgment if the creditor has provided sufficient evidence that the person owes the debt, such as a signed contract or promissory note.

After being granted a default judgment, the creditor can pursue further legal action to seek repayment. In Texas, legal actions to collect a judgment are not limited by the same four-year statute of limitations that govern collection efforts.

If this concerns you, consult a Dallas debt relief attorney who can review your situation to determine your best legal options for fighting a debt collection lawsuit.

Filing For Bankruptcy Could be a Viable Option

If you are struggling to make ends meet each month, you may want to consider filing for bankruptcy relief to get rid of old debt. A Chapter 7 bankruptcy case can eliminate your unsecured debts in as fast as four to six months after filing.

In most Chapter 7 cases filed in Texas, debtors discharge all their unsecured debts while retaining their property. Once you complete a Chapter 7 bankruptcy case, creditors are not allowed to take any actions to collect a discharged debt.

Filing a bankruptcy case can also give you immediate relief from collection efforts. When you file a bankruptcy petition, the automatic stay prohibits creditors from taking any actions to collect debts, including filing lawsuits or continuing a lawsuit.

The automatic stay remains in effect throughout your bankruptcy case unless modified by the court. Once you receive the bankruptcy discharge, your legal liability to repay discharged debts is eliminated. In many cases, the bankruptcy filing can help you improve your credit rating much faster than allowing old debts to remain on your credit report.

Speak to Our Debt and Bankruptcy Lawyers for a Free Consultation

If you are being harassed by aggressive debt collectors, consult our bankruptcy and debt lawyers in Dallas and Fort Worth for a free consultation. They can determine your best legal options for fighting a lawsuit. You can also speak to a debt and bankruptcy attorney to discuss the statute of limitations on debt in Texas.