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The Statute of Limitations (SOL) is a crucial debt collection law in Texas, but it is not the only regulation protecting your legal rights in the Lone Star State.

The SOL is four years for all types of consumer obligations. However, nuances in the rules could have a significant impact on the amounts you must ultimately pay.

For example, overlooking tiny details (such as making a small payment) could give the collection agency extra time to file suit.

It pays to be prepared to avoid regrets from simple mistakes. Learn about auxiliary laws and resources. Hire an attorney for legal advice.

Texas Debt Statute of Limitations

The Statute of Limitations (SOL) on consumer debt in Texas is four years – regardless of the type of obligation (oral, written, promissory note, or open-ended contract). However, it is crucial to understand what this means.

  • Does time bar creditors from filing a lawsuit to compel payment
  • Does not prevent collection agencies from contacting you
  • Does not absolve your obligations to the creditor

Also, relief programs, medical bills, credit cards, auto repossession, and judgments each have unique elements that could affect your strategy for dealing with collection agencies.

Relief Program

Do you qualify for debt relief? A settlement program may be a viable alternative for Texas residents meeting four general eligibility guidelines.

  1. Owe more than $10,000 in unsecured debt such as credit cards, unpaid medical bills, payday, and personal loans
  2. Do not include amounts owed for federal or private student loan obligations in the $10,000 minimum even though they are unsecured
  3. Gainfully employed and earning enough income to fund an escrow account with at least 1/3 of your responsibility within 24 months – after stopping payments to creditors
  4. Have not yet reached the SOL expiration date and still face the threat of a lawsuit to garnish wages, or attach a lien against a property
  5. Collection accounts appear on your consumer report and will remain a long time (delete seven years after the date of first delinquency)

Medical Bills

The Statute of Limitations on medical bills in Texas is four years. For example, a hospital can sue for unpaid medical bills and put a lien on your home or garnish wages – if they go to court before the SOL expires and win the case.

Why wait a long time for legal relief? You may find that some of these resources and related laws could help during the interim.

Assistance 

Medical bill assistance programs in Texas can help many patients make ends before the SOL expires. In most cases, there is no single resource or place to turn. Instead, people have to cobble together financial aid from many small sources.

Credit Reports

Do not confuse the SOL with the consumer credit reporting rules for medical debt. There is no overlap between the two.

  • Display on consumer reports after a 180-day waiting period to allow health insurance companies time to process claims
  • Disappear from consumer reports seven years after the date of first delinquency
  • Reappear as public record judgments and display on file for seven years counting from the issuance date

Surprise Bills

Texas Senate Bill 1264 augments SOL rights. The new law protects patients who have state-regulated health plans from surprise medical bills from out-of-network providers in certain situations.

  • People seeking treatment at an in-network hospital or facility
  • Patients needing emergency treatment from an out-of-network hospital or facility

The rule bans doctors and providers from sending balance bills to patients in these two situations. Instead, they can apply for arbitration or mediation to resolve payment issues with insurers over those unreimbursed amounts.[1]

Residents covered under this act participate in state-regulated health insurance.

  • State employees
  • Teacher retirement system
  • Insurance cards include “DOI” or “TDI”

Timely Billing

Section 146.002 of the Texas Civil Practices and Remedies Code also supplements SOL legal protections. The timely billing regulation states that the health care service provider shall invoice a patient not later than the first day of the 11th month after the date the services are provided.[2]

In other words, a hospital could have up to eleven months to send you a bill after giving treatment. This law balances the need for hospitals to file and adjudicate claims with insurance companies, and then send a timely invoice to the patient for the unreimbursed amounts.

  • Deductibles
  • Copayments
  • Coinsurance
  • Out-of-network balance billing
  • Uncovered services

Credit Cards

The Texas Statute of Limitations on credit card debt and other open-ended accounts is four years. The revolving balance shrinks with each payment, allowing you to borrow again in the next billing cycle.

Be very careful not to restart the credit card SOL by accident and give the collection agency an extra time to file a lawsuit to garnish wages or place a lien on your house.

  • Consolidating any outstanding amounts resets the clock because you are transferring the balance to a new creditor and begin with a clean slate
  • Charging new expenses to any delinquent account is an acknowledgment that the debt belongs to you and restarts the timer
  • Making a tiny payment to the issuing bank or collection agency also resets the clock and extends their legal rights to file a lawsuit

Auto Repossession

The Texas Statute of Limitations for auto loans is also four years. However, the SOL does not relate directly to repossessions because the equity in the car secures the contract. Any lender that holds legal title to your automobile can repossess the vehicle if you fall behind on payments – without having to file a lawsuit first.

The auto loan SOL comes into play if you still owe the lender money after they sell the repossessed car at auction, which is very common due to two factors.

  1. Finance charges and late fees swell the balance owed
  2. Resale values of cars plummet the moment you drive from the dealer

Judgments

Keep in mind that there is no Statute of Limitations on judgments in Texas. If a debt collection agency or creditor files and wins a lawsuit, the court will award a ruling that lasts for ten years initially.

The creditor can extend a judgment for additional decades by using two legal tactics, which means that consumers can remain in debt for a lifetime – after losing in court.[3]

  • File a motion to revive during the two-year dormancy period
  • Issuing and serving writs of execution before the expiration

Texas Debt Collection Laws

Learning the relevant Texas debt collection laws can help you avoid having to respond to a lawsuit. In addition to knowing where you stand relative to the statute of limitations, become familiar with your legal rights under federal and state-based acts. Also, if your spouse passed away, you should understand your possible obligations.

The Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act (FDCPA) is a federal regulation that provides safeguards to Texas residents with unpaid medical obligations. This federal law applies to out-of-state office locations of the healthcare provider or third-party collection agency.

The FDCPA offers these essential consumer safeguards.[4]

  • The right to sue for violations
  • Protection from harassment
  • Disclosure of debt to others
  • Contact at inconvenient times
  • Proof of obligation

Texas Debt Collection Act

The Texas Debt Collection Act (Title 5 Subchapter 392) expands legal protections to patients with unpaid medical bills. The law provides these additional consumer safeguards.[5]

  • Surety bond
    • $10,00 bond requirement
    • Claims against the bond for violations
  • Information in files of a collection agency
    • 45-day limit to report information to the consumer
    • Correction of erroneous information
  • Prohibited debt collection methods
    • Threats or coercion
    • Harassment or abuse
    • Unfair or unconscionable means
    • Fraudulent, deceptive, or misleading representations
    • False use of credit bureau name
    • Use of independent debt collector

After Death

Texas does not have a debt collection law that prevents creditors from pursuing payment after the death of a person owing large sums of money. A single former spouse could be responsible for unpaid hospital bills and credit card balances after the demise of his or her wife or husband.

Community Property

Texas is a community property state, which means that all assets acquired during the marriage belong to the estate.  The estate is all the qualifying assets owned by the deceased.

When a person dies, the estate pays the outstanding obligations through the probate process. Therefore, the surviving spouse may be responsible for any remaining medical and credit card debts.  

MERP

The Medicaid Estate Recovery Program (MERP) can hurt a surviving spouse after the death of his or her life partner. The MERP rules allow the state to file a claim against the estate of a deceased Medicaid recipient – which by definition, has few assets other than a home.

A MERP claim could affect the estate of your deceased spouse if he or she received Medicaid support while still alive. [6]

  • Long-term care when over the age of 55
  • Specific hospital and prescription drug services

[1] Senate Bill 1264

[2] TX Civil Practices & Remedies Code

[3] Darrell Cook Associates – Judgments

[4] FTC FDCPA

[5] Title 5 Subchapter 392

[6] TX Health & Human Services MERP