Understanding the statute of limitations on debt in Texas

If you’ve run into difficulty with debt and even find yourself being hounded by debt collectors, you likely feel as if you can never get out of the mess.

The good news is there are options available and laws to protect you.

In Texas, just as in many other states, there's a “statute of limitations”—a legal time limit—on debt collection.

While getting a handle on it may feel a bit like reading assembly instructions translated from a foreign language, a little patience and focus can get those laws working for you.

Keep reading to learn how you can improve your situation.

Let’s start with the most frequently asked questions about Texas’s statute of limitations on debt and answer them in a straightforward, easy-to-decipher language.

What is the statute of limitations on debt in Texas?

The statute of limitations on most debt in Texas is four years, as stated in the state’s GOV link. This period begins from your last payment date, or when you first defaulted on the debt.

This means that a creditor has four years from the date of your last payment or acknowledgment of the debt to file a lawsuit against you.

After four years, the debt is considered "time-barred," and although a collector can still attempt to collect the debt, they cannot legally sue you for it.

What happens after 7 years of not paying debt?

Because of the Fair Credit Reporting Act, after you haven’t paid for seven years, typically your debt will fall off your credit report.

Just because the debt will no longer affect your credit doesn’t mean your debt is forgiven. Debt collectors can still try to collect the debt, but they can’t sue you for it if it's past the state's statute of limitations.

In Texas, this period is generally four years.

Can a debt collector take you to court after 7 years in Texas?

The short answer is no because the statute of limitations on debt in Texas is only four years.

But a debt collector can potentially take you to court even after seven years have passed since the debt was incurred because there are certain situations where the statute of limitations can be extended or "reset."

There are different situations that could restart the clock on the statute of limitations, extending the time the debt collector can sue you for the outstanding debt.

Resetting the debt clock: actions to avoid

Be prudent in how you react to debt collection calls and correspondence.

Without your realizing it, debtors can restart the statute of limitations on debts—which gives them more time to sue for your outstanding payments.

The following actions will restart the clock on your statute of limitations:

• Making any payments to the debt account within the seven year period
• Acknowledging the debt in any manner
• Accepting a debt repayment plan
• Agreeing to a debt settlement amount
• Making any charges on the dormant debt account

Dealing with debt collectors: don’t fall for their persuasion techniques

Debt collectors often use persuasive tactics to encourage debtors to take the actions listed above in order to reset the clock on the statute of limitations and regain their ability to sue.

But Texas has implemented a new debt-collection law to protect debtors. Under this law:

• Payments to a time-barred debt can no longer restart the statute of limitations in the state.
• Debt collection agencies must provide written notice for any action they intend to take on a time-barred debt.

These additions to the debt-collection law in Texas are designed to safeguard debtors from falling into the trap of resurrecting "zombie debts."

By preventing the restart of the statute of limitations and ensuring transparent communication, Texas aims to provide debtors with enhanced protection against unfair debt collection practices.

Understanding the timelines: when to do what

So, you are facing a lawsuit regarding your debt collection. What should you do and when should you do it?

The timelines for responding to a lawsuit in Texas are unique and can vary based on the court handling the case, but here is some orientation:

• For cases filed in Justice Court or Small Claims Court, your response, known as an Answer, must be filed on the Monday following 14 days from the day you were served.
• For cases filed in County Court or District Court, your Answer must be filed on the Monday following 20 days from the date you were served.
• If the Monday due date happens to be a legal public holiday, then the Answer must be filed on the next day or the subsequent business day.
• All Answers must be filed by 10:00 am on the specified date.

Giving a response: how to answer debt collection orders

Your response, or Answer, is your rebuttal to the allegations the plaintiff (person or entity suing you) has made against you in the collection summons.

The most common response is denial, although you can also admit to or partially deny some allegations. Your Answer can include reasons you believe the plaintiff's case against you is invalid.

For example, if the debt is old and beyond its expiration date, you can cite the expiration of the statute of limitations as an affirmative defense.

Here’s an example.

CASE NO: [Case Number]

[Plaintiff's Name],

vs.

[Your Name].

I, [Your Name], the Defendant, denies all allegations in the Plaintiff's Original Petition and demands strict proof. I assert the statute of limitations as an affirmative defense.

Respectfully,

[Your Name]

It's crucial that you send a copy of your Answer to the plaintiff or their attorney, adhering to the strict service procedures outlined by Texas law.

Utilizing return mail receipt services can provide proof that your mail was delivered to the plaintiff. Ensure you file the correct documents on time in the appropriate court.

Texas has stringent regulations regarding responses to debt collection lawsuits. And your Answer must meet specific criteria to be accepted by the court.

It’s, therefore, prudent to search for legal advice or to verify your answer with the help of governmental sources.

The Bottom Line

Sure, laws and statutes can be as intimidating as the many terminals at the Dallas/Fort Worth airport, but taking the time to familiarize yourself will have you navigate your way around.

And remember, should you ever need additional guidance on your unique financial journey, seeking advice from a legal expert or financial advisor is always an excellent idea.