Collection Texas-Style: An Analysis of Consumer Collection Practices in and Out of the Courts

Abstract

As many as forty-four percent of Texans with credit files have non-mortgage debt in collection; this is more than ten percent above the national average. The Authors provide a snapshot of collection practices employed in Texas over a two-year period following the enactment of new court rules governing the litigation of most collection cases. Using a combination of quantitative and qualitative methods, they consider data in three general categories:

(1) consumer complaints to the state and federal agencies;

(2) court outcomes over a two-year period along with related demographic data; and

(3) court observations conducted in five counties with a review of the websites for each of the courts within those counties.

The Authors find that for many Texans, consumer debt collection means threats and intimidation that disrupt their family and work lives. While they also found that the default judgment rate in consumer collection cases was slightly lower than reported in a previous study, they found that it appears to be growing, signaling that more work remains to be done. The Authors recommend a number of reform efforts that include steps to increase the quantity and quality of information provided to consumers at all stages of the collection process and to increase enforcement of existing protections. To the extent that court proceedings remain an integral part of that process, the Authors also recommend further standardization of court procedures to ensure only valid claims are raised. They also encourage courts to actively participate in efforts to ensure that the protection of consumer rights does not stop at the courthouse door.

Keywords: consumer collection practices, consumer debt, debt collection, consumer protection, debt claims - litigation, CFPB - Texas complaints, FTC debt collection study