Businesses in Texas facing commercial debt should be aware of their rights and options under the state’s commercial debt collection laws. These laws are put in place to protect the rights of both creditors and borrowers and offer numerous benefits to those navigating the complicated process of debt collection.
In the state of Texas, the Texas Finance Code governs the law of commercial debt collection. This code establishes the rights and obligations that are binding upon both parties involved in a debt collection situation. It is important for Texas businesses to understand these laws so that they can benefit from the protections they offer.
The Texas Finance Code provides debtors certain remedies and privileges in the event of dispute over a debt or loan. This includes the enforcement of contracts, the protection of creditors from unfair practices, and the protection of debtors from unreasonable collection fees.
For those businesses facing commercial debt in Texas, understanding the protections of the Texas Finance Code is essential for unlocking the benefits of the state’s commercial debt collection laws. Here are seven major advantages of understanding and utilizing these laws:
1. Clear guidelines on debt collection procedures: The Texas Finance Code clearly outlines acceptable debt collection practices, which provides creditors and debtors with guidance on how to proceed in a debt dispute. This includes regulations on when and how often a creditor can contact a debtor, as well as penalties for creditors who break the law.
2. Protection from unfair collection tactics: Debtors are protected from harassment, threats, and deceptive practices under the Texas Finance Code. This prevents creditors from subjecting debtors to abusive or deceptive tactics, such as calling several times a day or falsifying debt information.
3. Enforceable contracts: The code outlines the terms of legal contracts between creditors and debtors, which allows creditors to enforce contracts if and when necessary. This means that if a debtor fails to adhere to the contract, the creditor can take legal action to enforce the terms of their agreement.
4. Compulsory mediation: The Texas Finance Code provides debtors with the right to enter into compulsory mediation in the event of a debt dispute. This means that both parties can use the court system to attempt to resolve the dispute without having to go to court.
5. Protection from excessive interest rates: The Texas Finance Code limits the interest rate that a creditor can charge for a loan, ensuring that debtors are not subject to excessive interest rates. This helps to protect consumers from predatory lenders, who may try to take advantage of debtors by charging high interest rates.
6. Protection from unreasonable collection fees: Creditors are required to follow certain guidelines when it comes to collecting fees from debtors. This protects debtors from being charged excessive or unreasonable fees for collection.
7. Right to sue: Debtors have the right to file a lawsuit against creditors who violate the Texas Finance Code. This allows debtors to seek legal remedies if they feel they have been wronged by a creditor.
In addition to the benefits listed above, businesses should also be aware of the time limits associated with commercial debt collection claims in the state of Texas. Creditors are only allowed to attempt to collect a debt for a certain amount of time before the debt is considered time-barred and uncollectible.
Furthermore, businesses should also be aware that there are certain debts that are exempt from the provisions of the Texas Finance Code. These include taxes, child support, alimony, fines, and certain government debts.
Understanding the protections provided by the Texas Finance Code can help businesses unlock the benefits of the state’s commercial debt collection laws. With these benefits, companies can ensure that their rights are protected and that the process of debt collection is fair and equitable for both parties.