Business Debt Collection Laws: Everything You Need to Know

Business debt collection laws vary from state to state, so it's important to understand the rules for debt collection in your jurisdiction.3 min read

Business debt collection laws vary from state to state, so it's important to understand the rules for debt collection in your jurisdiction. Many states provide consumer protections that prevent debt collectors from harassing you and making threats, but the collector still has a variety of other legal means to recoup their debt.

Texas and Small Business Debt Collection

Texas is a state whose debt collection laws include a multitude of consumer protections. These laws can be very beneficial to individuals dealing with debt but can harm small businesses looking to retrieve funds owed to them.

Texas' laws related to debt collection can be found in the Finance Code Title 5, Chapter 392. Chapter 392 contains several subchapters that outline what debt collection solutions businesses can use and remedies available to consumers if a business uses an illegal debt collection method.

In Subchapter D of the finance code, you can find several debt collection methods that aren't allowed in Texas. Under Subchapter D, threatening someone with violence in order to pay a debt is illegal. Debt collectors are not allowed to intimidate debtors into paying what they owe. Similarly, a debt collector cannot make a false accusation of fraud against a consumer as a form of blackmail to have the debt paid.

However, debt collectors are afforded some protections under Subchapter D. For instance, this section of the finance code gives debt collectors the ability to use any and all legal means to recoup a debt. Deception is not a legal or acceptable method of debt collection under Subchapter D.