What if one misstep in your collection script could expose your agency to costly lawsuits in Texas?
In Texas, justice courts saw a 162% increase in debt collection lawsuits between 2014 and 2019. This sharp increase underscores how closely regulators and courts are watching collection practices. For agencies, even minor errors in communication or documentation can escalate into compliance violations and financial risk.
To operate confidently in Texas, agencies need a firm grasp of both federal and state rules governing consumer debt collection. The Fair Debt Collection Practices Act (FDCPA) sets the national baseline, while Texas law adds its own layer of compliance obligations.
This blog examines how the FDCPA applies in Texas, alongside state-specific laws, including which debts are covered, key consumer rights, prohibited practices, and the consequences of non-compliance.
The FDCPA, or Fair Debt Collection Practices Act, is a federal law that governs how third‑party debt collectors may interact with consumers. It prohibits abusive, deceptive, or unfair practices in the collection of consumer debts.
In Texas, the FDCPA works in conjunction with state-specific rules primarily codified in the Texas Finance Code Chapter 392, to create a dual compliance environment for collection agencies. Collection agencies operating in Texas must follow both the federal FDCPA and the state’s own regulatory safeguards to avoid consumer complaints, regulatory actions, or litigation.
Now that you understand what FDCPA means for Texas collectors, let’s break down which types of debts actually fall under its scope.
Under the FDCPA, the law protects consumer debts incurred primarily for personal, family, or household purposes, not business debts. For your Texas agency, this means that certain types of delinquent accounts must always be handled in accordance with FDCPA guidelines when collecting from consumers in Texas or elsewhere.
Here are types of debts commonly covered by the FDCPA:
These are secured loans where the consumer pledges real property, usually a home, as collateral. If they stop paying, the lender can foreclose. While they’re secured, once a mortgage is delinquent, many agencies treat parts of the unpaid balance (interest, late fees) under FDCPA when communications are made by a third‑party collector.
This is unsecured consumer debt arising from revolving lines of credit (cards) extended by banks or issuers. Since there’s no collateral, collections rely purely on consumer payments. Because credit card debt is common and directly tied to consumer spending, it’s fully covered by FDCPA protections.
These are one‑time, non‑secured or sometimes secured loans given to consumers for personal use (e.g., for medical bills, home repair, or emergency expenses). The key is that they’re not business‑related. When such loans go delinquent and a third party collects, FDCPA rules apply.
Medical debt arises from healthcare services a consumer receives (such as hospital, doctor, or specialty treatments) that are not fully paid for. These are generally unsecured and considered “consumer debts” for FDCPA purposes. When an agency collects them, it must adhere to the same rules regarding communications, disclosures, and fair conduct.
These are funds borrowed for education. Many are federal or private, and in some cases, the original creditor or government entity collects. But when collection is handled by a third party on defaulted student loans (especially private ones), the FDCPA’s rules may apply depending on the loan’s structure and who is doing the collecting.
While many consumer debts fall under FDCPA protections, it's equally important to understand which types of debts are excluded.
Not all debts are protected under the FDCPA. As a collection agency, you should know which accounts you can and can’t apply FDCPA rules to.
Here are debt types typically not covered by the FDCPA:
Debts taken on for business, commercial, or agricultural purposes rather than personal or household use. The FDCPA doesn’t apply to these, so your agency may use more flexible collection tactics (while still complying with general laws).
These are specialized credit deals, such as financing tied to commercial operations, like accounts receivable financing, where debt arises from business credit practices rather than consumer credit. Those typically fall outside FDCPA coverage.
Obligations like unpaid taxes, fines, penalties, or overpayment of government benefits. These are generally not covered by FDCPA, which is focused on consumer‑level debts.
When the creditor (the original lender or service provider) collects the debt itself (rather than hiring a third party), FDCPA protections usually don’t apply. The law primarily governs third‑party collection efforts.
Commonly, debts serviced or collected in‑house by a credit union (especially under its own name) may not be subject to FDCPA rules because the union acts as the original creditor unless it uses naming or third‑party methods that trigger FDCPA status.
Now that you know which debts fall outside FDCPA protections in Texas, it's equally important to understand the rules that do apply and what practices are strictly off-limits.
The Fair Debt Collection Practices Act (FDCPA) establishes mandatory boundaries for how debt collection agencies are allowed to act. Violating these rules can result in consumer lawsuits, regulatory penalties, and reputational harm to your agency.
Below are the main categories of prohibitions and how they must be applied in your day-to-day operations.
Debt collectors must adhere to specific rules regarding when, where, and how they communicate with consumers. Missteps here are among the most frequent sources of liability.
You may not call the consumer before 8:00 a.m. or after 9:00 p.m. local time, unless the consumer has explicitly agreed to calls at other times. Calls outside the allowed window are presumed to be abusive.
Example: If your automated dialer places calls to a consumer at 7:30 a.m. without their express consent, that constitutes a violation.
If you know (or should know) that the consumer’s employer restricts personal calls, you cannot contact them at work for debt collection.
Example: If the consumer tells you, “My office doesn’t allow personal calls,” your system must flag and block further workplace calls to that number.
You cannot discuss the consumer’s debt with others, such as friends, family, or employers, except in limited situations (e.g., with an attorney, spouse, credit bureau, or for location purposes). In such location calls, you must not disclose that the consumer owes a debt or your role as a collector.
Example: Contacting a friend to ask for the consumer’s address is allowed, but disclosing “I’m calling about a debt you owe” is not.
If a consumer sends a written request to stop all contact (a “cease and desist” notice), your agency must generally honor that. After that point, only limited communications are allowed, such as to notify that you are ceasing collection efforts or intend to take legal action.
Example: Once the consumer submits the stop notice, you must pause all calls, texts, or letters (except as allowed) and retain proof of the notice.
These are acts that the FDCPA explicitly bans. As a collection agency, you must train your teams to recognize and avoid these.
You may not harass, oppress, or abuse any person in collecting a debt. Specific forbidden practices include:
You cannot use deception or misrepresentation in your communications. Examples of violations include:
The regulation also requires that your initial communication or validation notice state that you are trying to collect a debt and that the information may be used for that purpose.
These are actions that are unjust or exploitative. Some key examples:
Beyond the core prohibitions above, your agency must also handle other obligations carefully:
Within five days of your first communication (or in that first message), you must send a validation notice containing:
Under Regulation F, calls to a consumer about the same debt are presumed to be abusive if they exceed seven calls in a seven-day period or occur within seven days after a conversation about that debt.
You must retain records (e.g., call logs, notes, and recordings) demonstrating compliance with FDCPA and Regulation F for at least three years after your last collection activity on the account.
The revised rules clarify that you may not threaten legal action on a debt that is past the statute of limitations. Also, before furnishing a debt to a credit reporting agency, you must comply with validation obligations and certain waiting periods.
By mastering these rules and incorporating them into your internal policies, training, and automation, your agency can pursue collections aggressively while remaining compliant with the law.
With tools like Tratta, support full adherence to FDCPA, Reg F, TCPA, and evolving state regulations. Our debt collection security and compliance software supports state-specific disclosures, which can be configured by consumer, client, location, and time.
Book a demo today to see how Tratta can simplify compliance, protect your agency, and streamline your debt collection workflows.
While the FDCPA forms the federal foundation, Texas imposes its own set of rules that agencies must follow in addition to federal law.
Texas enforces its own debt collection law, as outlined in Chapter 392 of the Texas Finance Code, also known as the Texas Debt Collection Act (TDCA). This statute works in conjunction with the FDCPA and often imposes stricter requirements for agencies operating in Texas.
Some key points worth noting for your agency:
Even if you are compliant with FDCPA, failure to follow Texas’s added rules can lead to state-level liability. While the FDCPA sets the national framework, Texas introduces its own set of rules that collection agencies must follow closely.
Alongside these legal obligations, it’s equally important to understand the rights consumers hold under these laws.
Also Read: TCPA Consent Rule Changes for 2025
Consumers have certain protections under both federal and Texas law that your agency must honor. These rights help ensure your collection practices are fair and defensible.
Here are key rights consumers hold:
These rights form the legal guardrails that your agency must build into its policies, communications, and operations in Texas, where state laws may impose additional requirements.
While consumers have clear protections under the law, it's equally important for agencies to understand the risks they face when those rights are violated.
When your agency crosses the line of FDCPA or Texas debt collection laws, the consequences can be serious, including financial, operational, and reputational impacts. Here are some of the main risks you need to be aware of:
Also Read: Understanding Debt Collection Laws in Illinois
Complying with the FDCPA and Texas debt collection laws is critical to protecting your agency from legal, financial, and reputational risks. From understanding which debts are covered to respecting consumer rights and avoiding prohibited practices, every step in your process must be carefully aligned with both federal and state regulations.
To simplify compliance and streamline your debt recovery process, tools like Tratta can make a measurable difference. Tratta helps you stay compliant, simplify compliance oversight, and reduce legal risk.
So, why wait? Request a demo now to see how Tratta can help you stay compliant, reduce risk, and collect smarter.
FDCPA limits calls to between 8 a.m. and 9 p.m. local time (unless debtor consents). Making more than seven calls about the same debt within a seven-day period is presumed abusive under the CFPB rule. Texas law also bans repeated or continuous calls intended to harass.
They may use these channels, but must clearly identify themselves as a debt collector and offer opt-out methods. Public or visible messages (visible to others) are prohibited.
In Texas, most consumer debts have a 4-year statute of limitations from the date of last payment or default. After that, the creditor cannot lawfully sue to collect (though collection attempts may still occur).
They don’t need a license, but third-party debt collectors or credit bureaus must obtain a $10,000 surety bond and file it with the Texas Secretary of State before collecting.
Texas prohibits deceptive practices like misrepresenting documents as court-issued, using false business names, or collecting unauthorized fees. Harassment (repeated calls, threats) is also disallowed.
