Debt Collection in Texas


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The Texas Tribune, in conjunction with NerdWallet, recently reported on the debt collection practices of rent-to-own businesses in Texas and other states.

The U.S. Justice Department reports that historically speaking, debtors were jailed for failing to pay their debts. These debtors' prisons were banned under U.S. federal law in 1833, and 150 years later, the U.S. Supreme Court affirmed that jailing debtors is unconstitutional under the Fourteenth Amendment.

But while most businesses are limited to civil remedies to collect debts,
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and must abide by the Fair Debt Collection Practices Act when doing so, rent-to-own businesses have been taking advantage of laws in Texas and other states to move beyond civil remedies and into criminal charges for theft.

In Waco County, for example, rent-to-own companies filed theft charges against more than 400 customers in the last three-and-a-half years. Nationwide, those criminal charges number in the thousands.

This practice and other questionable debt collection practices from rent-to-own companies triggered a Consumer Financial Protection Bureau (CFPB) investigation, however. In particular, the CFPB is concerned about record-keeping, as Rent-A-Center's subsidiary, Acceptance Now, allegedly mishandled customer records. Companies that mishandle customer and debtor records are subject to penalties and fines from state and federal agencies.

Indeed, Jake Posey, managing shareholder of The Posey Law Firm, PC notes, unpaid debt is an enormous burden on companies, but sometimes those debts reflect larger problems with business models that can be remedied with better business practices and methods. In addition, better business practices and emphasis on keeping excellent records can remedy both difficulty collecting debts and potential negative consequences from regulators and agencies.

ABOUT THE AUTHOR: Jake Posey
The Posey Law Firm PC, led by Jake Posey, is a sharply focused government relations and business law firm based in Austin, Texas. The firm’s government relations practice advises clients and advocates for the successful development of public policy in the legislative, judicial, and executive branches of Texas government.

Representing Fortune 500 companies, respected market leaders, and some of Texas’ leading state associations, Mr. Posey’s mission is to diligently deliver strategic business, political and legal solutions for his clients.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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