August 30, 2007

Texas Debt Validation

My vehicle was repossessed in April of 2005. I was two months late on my payment and had made firm arrangements to pay with my first check. Two days before I received my check, the finance company repossessed my vehicle while I was working. Recently, I pulled my credit report and soon after began receiving calls from the finance company. I attempted to make arrangements but the finance company stated I could make a lump settlement no payments. From day one they have stated this. I advised recently that I still have no means to pay a lump sum.

A month later the finance company placed account with Collection agency. Since then I have received two notices from them and two calls. One voicemail incidated my file was being turned over to the state of Texas for legal proceedings and one of the Collectors told me they were preparing to file suit. My question: The finance company charged off the balance in June of 2005 but are charging me the same interest rate when I purchased the vehicle and the collection agency total amount is $2000 in addition to the balance forwarded to them from the finance company. I would like to know where I could further research the amount of interest that can be charged and for how long after a charge off by the original creditor has been placed. 2. What type of fees can a collection agency charge. 3.and I was considering sending in a $10 payment along with a letter disputing balance and requesting info from collection agency for a breakdown of the fees to make sure these are legal and applicable charge added to balance. What type of letter would be possibly get results?

Amanda

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Hi Amanda,

In many states, sending in a payment [even as low as $10] restarts the statute of limitations.  I believe Texas sets the bar higher by requiring a written agreement to renew a potential cause of action; nevertheless, sending a payment to a debt collector is not something to be taken lightly.  Additionally, you don’t need to send in a “$10 payment along with a letter disputing balance”, as Texas Finance Code Chapter 392 permits a consumer to request debt validation beyond the thirty-day period prescribed by the FDCPA.  Specifically, §392.202 (a) states:

(a)  An individual who disputes the accuracy of an item that is in a third-party debt collector’s or credit bureau’s file on the individual and that relates to a debt being collected by the third-party debt collector may notify in writing the third-party debt collector of the inaccuracy.  The third-party debt collector shall make a written record of the dispute.  If the third-party debt collector does not report information related to the dispute to a credit bureau, the third-party debt collector shall cease collection efforts until an investigation of the dispute described by Subsections (b)-(e) determines the accurate amount of the debt, if any.  If the third-party debt collector reports information related to the dispute to a credit bureau, the reporting third-party debt collector shall initiate an investigation of the dispute described by Subsections (b)-(e) and shall cease collection efforts until the investigation determines the accurate amount of the debt, if any.  This section does not affect the application of Chapter 20, Business & Commerce Code, to a third-party debt collector subject to that chapter.

(b) Not later than the 30th day after the date a notice of inaccuracy is received, a third-party debt collector who initiates an investigation  shall send a written statement to the individual:

  (1) denying the inaccuracy;

  (2) admitting the inaccuracy; or

  (3) stating that the third-party debt collector has not had sufficient time to complete an investigation of the inaccuracy.

(c) If the third-party debt collector  admits that the item is inaccurate under Subsection (b), the third-party debt collector shall:

  (1) not later than the fifth business day after the date of the admission, correct the item in the relevant file; and

  (2) immediately cease collection efforts related to the portion of the debt that was found to be inaccurate and on correction of the item send, to each person who has previously received a report from the third-party debt collector containing the inaccurate information, notice of the inaccuracy and a copy of an accurate report.

(d) If the third-party debt collector states that there has not been sufficient time to complete an investigation, the third-party debt collector shall immediately:

  (1) change the item in the relevant file as requested by the individual;

  (2) send to each person who previously received the report containing the information a notice that is equivalent to a notice under Subsection (c) and a copy of the changed report; and

  (3) cease collection efforts.

(e) On completion by the third-party debt collector of the investigation, the third-party debt collector shall inform the individual of the determination of whether the item is accurate or inaccurate.  If the third-party debt collector determines that the information was accurate, the third-party debt collector  may again report that information and resume collection efforts.

Other articles relating to your question are Texas Statute of Limitations and I’m In Deepo With A Repo.  You can find some general rules relating to Texas repossession at:

lawdog.com/states/tx/repo.htm

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.

(source=occc.state.tx.us/pages/Legal/Laws/fcode/ch392.html)

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