We Know How To Handle Debt Collection in Texas

When those instances occur, they will take on debts. Money loans controlled by banks or credit unions are the most secured forms of repayments that are hard to disqualify or get around. A loan is meant to be paid back, even without interest it must be settled at some point in a contract or by agreement.

But there is always a catch. Sometimes a law is not followed without being broken. In those cases there’s little legal recourse to follow, as nothing was legally done wrong. There are ways to avoid debts being repaid. There are also ways to legally recuperate on those debts through the same system which was abused to escape the cycle of payback.

In Texas, the laws are structured to give difference and relief to the parties in debt. This makes it harder to forcibly recover the owed assets by the collectors or loaners based on the reasoning behind the debt’s origin. Most people who take out debt are poor, and often find great difficulty paying it back. They are sent into defaults or bankruptcy where their assets may be totalled up and liquidated to pay as much back in one go as possible, but that is a last resort which is meant to be avoided.

But what if someone has no assets? What if they have been legally given away, or kept in holding, by someone else? If their land, their property and their entire net worth is not their own to give away, the collection process is all but halted. They have nothing to repay with, and a trial to collect from them could go either way based on the evidence.

The system seems weighted against the collectors. Those who rightfully own the funds and assets that were promised to them. Fortunately, there are powerful legal tools and maneuvers on their side as well. The opportunities to afford patience to disadvantaged people are just as accessible to the privileged, high-earning folks who are only after money. In those cases there are clear paths to recovery that can avoid one-directional court cases and potential further losses.

This is what we do. We get the money to where it belongs, and we can get it back to you. Here is how.

Get the Debtor’s Attention

Sometimes debts are sincerely forgotten or only partially paid back while other amounts are neglected due to misunderstandings of the contract. And by that point, the debtor is already moving on to the next phase of their life to get away from the missteps the debt caused them.

In order to properly collect, the debtor must be found in a place where they can feasibly be able to repay the delinquent loan on their own in a reasonable fashion of time. And in order to bring that to light, they must be constantly informed and contacted. Investigations into their private life is a step too far, both legally and financially, for most loaners to consider. But there is nothing to be said against post-judgement discovery.

In the event that a judgement is reached by a court or legal system, the debtor can be challenged even if they win by utilizing interrogatories and requests for production. Interrogatories are depositions, listed questions that must be answered truthfully with the same intent one would have in court. Assuming the debtor has any capability to payback the loan on their own power, they would have to admit it even if it was ruled in their favor, at which point a turnover order would be easily obtained.

Requests for Production are legally obtained pieces of evidence of the debtor’s financial records and standing. We can request bank statements to see if there is an inflow of cash not utilized for necessary living expenses. If someone is only making enough money for their basic needs, this is where Texas steps in to protect them. However, anything over that amount would be entitled to be repaid to the loan as long as it is still actively pursued.

If a debtor is found to be lying or working deceitfully to evade repaying the loan, a motion to compel or motion for contempt can be rendered. These are far more aggressive plays and require the brunt of evidence to be produced before they can be pursued. Simply forgetting a few repayment dates is not enough. If the debtor is earning enough to pay the loan back reasonably but isn’t, that can be the first step to collecting what is owed in a way that follows procedure without threatening the debtor.

Debtors may also be impacted in a much more direct manner. If the loan is still outstanding, and they are not paying it, this can place a negative effect on their credit score if it is pursued. The abstract of the judgement can increase the drop in their credit rating more than the hard numbers of the loan itself. It must be manually updated, which is a process that a legal team can do. If a debtor’s credit score is too low, it can even impact their ability to rent housing.

Doing all of these things will get the debtor moving on repaying the loan first and foremost, if only just to get some peace of mind. If they can’t repay it in cash, a Motion for Turnover can be submitted and is much easier if they are willing to do so. This will require them to hand over their assets and belongings to a sheriff of local law enforcement to be auctioned and sold. This brings the debtor directly to us for further negotiations on what are and are not exempt assets which can be sold to cover the loan immediately.

A Day in Court

Most rulings will default to the debtor, and most immediate methods of collection will not be approachable due to the number of laws and protections. Wage garnishment, for example, is prohibited from being pursued in Texas, as is real estate foreclosures under most circumstances. That doesn’t mean that a debt will go uncollected forever. As long as there is a legally binding contract which establishes the terms of repayment, it can be pursued legally and without any kind of harassment.

When patience is limited and the wages are being sought immediately there are methods to collect it which may even evade the need to see a judge. Pre-judgement is the ideal time to settle a debt, before the long process in and out of courts has to take place. The longer the case goes on, the more money the loaner will have to spend to keep pursuing their collection through legal routes. Time is off the essence for all parties, except the debtor. The longer things go on the further they get from their own responsibilities.

The best way to avoid the long court process is to go them first and request one of several means of collection. One is a Writ of Garnishment. Although wages are exempt from collection laws, hard assets and cash deposits are not. A Writ of Garnishment goes from the approving judge to the debtor’s bank with one intermediary of the bank’s lawyer who accepts and approves it. Working with the bank’s lawyer requires an exposure fee to be paid, which is usually very low as the job of applying the writ to the affected account is not a long process, as long as the writ is procured through legal means.

Post-Judgement is a time to make plenty of important moves. Investigations, Discoveries and Depositions can put a lot of pressure on the debtor to reveal what finances they might have behind the scenes and seek an amenable resolution outside of court. Getting called before a judge over lies is a much worse fate than simply settling the debt. In the case of some debtors who are using illicit tactics to hide their assets or dodge the debt outright, these tools can solve the problem overnight.

If they remain resistant, there are ways to get them back into court, Motions to Compel a debtor to show will result in heavy penalties upon them if they refuse to comply with a reasonable request. It observes their rights as a citizen to privacy within the law while also asserting the authority of the loaner who the debtor is evading. Once rendered, a friendly judge will give a debtor four weeks, and a professional will give them two, to come forward or face full legal consequences. It works as a last resort in the judgement sphere.

Through investigation or discovery, if it is found out that the debtor has broken some law or has gone against the grain legally in the pursuit of avoiding paying off their debt, a Writ of Arrestment can be issued to place them under arrest. This is a rare and extreme last resort to submit a debtor before the proper legal process. No one wants to get to this place, but once it is reached, the matter will inevitably be settled as this is where the debtor’s options truly run out. They can contest it in court, but if there was enough evidence to issue the writ, there is already enough evidence to prove any lie about the debt they were escaping wrong.

How to Get the Money Back

Once the matter has been settled and the debtor is within reach and amenable, whether willingly or by legal conviction, the payoff can finally begin. Texas’ laws are meant to protect poor people, who might not be capable of maintaining stable employment, from being convicted or jailed just for being poor. No one wants to live in a world like that. However, the system meant to protect them is used by everyone, even millionaires who wanted a quick pump for their business that didn’t pay off, or rambunctious gamblers that go from state to state leaving loans in their wake.

Once a debt starts to get collected it can be a slow drip to fill the coffers that made it. There are experts who are more accustomed to the process of negotiating money and assets from one pocket to another. An Appointment of a Receiver is a practice where the law firm asks the court to seek out such an expert when the assets themselves are divided up uncommonly or are in values that are difficult to extract.

Someone whose debt was spent on living assets, such as livestock, which has a very tricky depreciation value, or a value that is moot as all the original animals have died, their loan can’t be paid back in bulk animal meat. But there is still value to what they own or owned before, and a Receiver can adjust to that.

The Receiver will work on behalf of the court, not the creditor. They won’t even report directly to the law team who request their appointment. This is not a common practice as it requires the assets to be further split, paying the legal team to seek out their participating and then paying the Receiver to handle the consolidation of the debt. They can be paid up to 25% of the total assets collected. In cases where vast amounts of personal property totalling into the hundreds of thousands, or millions, is involved they may be more useful in getting the things that are hidden from plain sight.

In Texas, certain property is exempt from writs of execution, where the hard assets are liquidated through sales or auctions and the money made is given to the creditors. Debtors can cleverly hide some of their own assets as these exempt properties in order to forego giving them up. A proper Receiver will be able to dispute those claims, and a well practiced law team can find them before a Receiver is needed. The list is quite extensive, though, and important to understand.

1. Homestead
2. Personal property within statutes
3. Wages
4. Prescription health aids
5. Retirement benefits
6. Workers’ Compensation
7. Burial plots
8. Property sold by the Debtor
9. Spendthrift Trust
10. Insurance benefits
11. Alimony & other support
12. Individual Judgements

All but the 12th are guaranteed to remain in ownership of the debtor throughout the judgement. It seems like a lot, but can be reduced down to only a few essential assets that are stipulated to only be able to total up to a certain amount. Understanding the legal difference between what assets can be pursued to equalize the loan and what can’t will allow for the maximum amount of potential collection to be rendered. Even if it’s not the whole amount, it can get close enough.

Spousal property, that which does not belong to the debtor or is in contest of ownership by the debtor’s spouse, is off limits. However, this is also a clever trick. If a debtor surrenders all of their shared assets to their spouse as personal property, gives them up in writing or by some form of legal separation, and has the spouse hold them so they can’t be liquidated, this is legal. But that doesn’t mean it’s right. A good legal team will be able to know when this happens, and can overturn the exception. Then all of the property will be shown as co-owned, and the collections can extend to the “protected property”.

Another way to handle recovery, if the debtor is receiving funding or payment from certain entities, is a Charging Order. While the normal laws can cover employment of welfare benefits, Charging Orders target specific entities and cover scenarios that fall outside of the regular payment models. These situations are usually set up by the debtor to avoid collections being called on their assets, and Charging Orders are there to keep them from breaking the system.

Charging Orders specifically target LLC and Partnership interests where the debtor is being paid via partial ownership or corporate assets by a company they are working for or have been involved with. This can be their own company or a company in which they have invested stock. Corporate stock is a non-exempt type of property which, if it is in a significant amount, can be seized and sold at public auction for the market value in order to recuperate part of the debt. This is one of the ways the creditor can be made into a court-ordered lien holder, but it must go through a Judge to be approved so the assets are not seized unconditionally.

Charging Orders are not meant to replace the whole process, they are meant to cover one specific hole in the system that debtors can exploit, even without knowing it. They only function if and when the exchanges occur, and if a debtor is cut off by a corporation and their stocks are traded prior to a Charging Order being rendered, they cannot be collected. Salaries also aren’t subject to a Charging Order under most circumstances. Assets distributed by companies become non-exempt once they belong to the debtor, meaning that any of them can be withheld until the Charging Order is overturned or the statutes of collections runs out.

Debtors who are partners in LLCs can establish special classifications within the company to help handle asset protection before any such lawsuits are filed. These companies are much harder to collect from as they can create credible deniability of their intent to “hide assets from a creditor” with their own system. However, even if they try to operate out of the system, a proper suit and a quickly timed Charging Order can hinder their ability to collect on or use their liquid cash assets before it can go to a proper creditor. At a certain point it will just be easier for them to pay the creditor than to deal with more and more loopholes their business has to take to keep a little more money between financial quarters.