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Collection Law:
Texas is known as a debtor state but an attorney can do several things for their clients in order
to insure that payment is received. Public records can be of assistance in determining if an outstanding account
is collectible. The typical collection case generally goes as follows:
- A demand letter is written demanding the amount due with the attached invoices from the Client.
The demand letter should also mention that if a suit is filed there will be an attempt to recover attorneys' fees.
It is also necessary to comply with all sections of the Texas and Federal Fair Debt and Practice Act. The demand
letter should be sent certified mail return receipt requested and regular mail.
- After 30 days have elapsed, (for a Consumer debt) the Client must decide whether or not to continue
with a suit. The Client must weigh the cost of suing the debtor (attorney, filing fees and time) versus how much
the debt is and how collectible the Client believes it to be.
- State of Texas law requires that the defendant answer the suit within 20 days of being served
with the lawsuit. If no answer is filed, the case can be set for a default judgment. Once a judgment is signed,
Client/creditor can then record the judgment by filing an abstract in the county records. The Constable is then
directed to attempt an execution of the judgment, by sizing any non-exempt assets of the debtor.
- An abstract of judgment once filed with the county attaches to all real property in the debtor's
name. This places a lien on any property owned by the debtor in that county.
- A turnover order is another avenue available once a judgment is received. A creditor is receiving
assistance from the court through an order to the debtor to turn over non-exempt property. The court can order
the debtor to turn over records which could lead to nonexempt property, or appoint a receiver with the authority
to take possession of the nonexempt property, sell it, and pay the creditor from the sale of the debtor's assets.
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