Texas Supreme Court Issues Order on Debt Collection

Garnishments may resume, but CARES stimulus funds are exempt. Judgment creditors must notify debtors of right to expedited exemption hearing.

5/19/2020 8:00 AM

NewsStateCOVID-19
Texas Supreme Court Issues Order on Debt Collection

The Texas Supreme Court on May 14 lifted a judicially imposed moratorium on certain debt collection practices during the COVID-19 public health emergency.

The court’s order states that the issuance and service of writs of garnishment and turnover orders may resume “in any action to collect consumer debt as defined by Texas Finance Code Section 392.001(2) . . . . but an individual judgment debtor or receiver shall be entitled, upon request, to a hearing (either in person or remotely, as local circumstances permit), within two business days of the court’s receipt of the request, to determine what funds are attributable to a stimulus payment received pursuant to Section 2201 of the CARES Act.”

Under the order, Texas courts and certain turnover receivers “must release or refund any [CARES] stimulus payments affected by garnishment or turnover.”

To that end, the order requires judgment creditors and certain receivers to send the following notice to judgment debtors when serving a garnishment writ on a judgment debtor:

“IF YOU RECEIVED A STIMULUS PAYMENT FROM THE IRS UNDER THE CARES ACT, THE AMOUNT YOU RECEIVED MAY BE SUBJECT TO A COURT STAY PROTECTING THOSE FUNDS DURING THE CURRENT EMERGENCY. YOU HAVE A RIGHT TO REQUEST A HEARING WITH THE COURT, AND THE COURT WILL CONSIDER YOUR REQUEST ON AN EXPEDITED BASIS.”

Industry commentators do not anticipate that the court’s order will disrupt the accounts receivable management industry, as bank garnishments (known in some states as bank levies or bank attachments) remain an infrequently used tool in the industry, typically serving as a last resort after collectors have exhausted attempts to establish a dialogue with consumers and reach a negotiated resolution.

For more detail, read the debt collection order itself, which the Texas Supreme Court issued in conjunction with a separate order that permits the eviction suits to resume.

ACA International members may find more compliance resources on our COVID-19: ACA Updates page and through our Compliance Frequently Asked Questions.

For more information on how the ACA Licensing staff can assist with your licensing needs, please contact us at Licensing@acainternational.org or call (952) 926-6547.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

Texas Supreme Court Issues Order on Debt Collection

The Texas Supreme Court on May 14 lifted a judicially imposed moratorium on certain debt collection practices during the COVID-19 public health emergency.

The court’s order states that the issuance and service of writs of garnishment and turnover orders may resume “in any action to collect consumer debt as defined by Texas Finance Code Section 392.001(2) . . . . but an individual judgment debtor or receiver shall be entitled, upon request, to a hearing (either in person or remotely, as local circumstances permit), within two business days of the court’s receipt of the request, to determine what funds are attributable to a stimulus payment received pursuant to Section 2201 of the CARES Act.”

Under the order, Texas courts and certain turnover receivers “must release or refund any [CARES] stimulus payments affected by garnishment or turnover.”

To that end, the order requires judgment creditors and certain receivers to send the following notice to judgment debtors when serving a garnishment writ on a judgment debtor:

“IF YOU RECEIVED A STIMULUS PAYMENT FROM THE IRS UNDER THE CARES ACT, THE AMOUNT YOU RECEIVED MAY BE SUBJECT TO A COURT STAY PROTECTING THOSE FUNDS DURING THE CURRENT EMERGENCY. YOU HAVE A RIGHT TO REQUEST A HEARING WITH THE COURT, AND THE COURT WILL CONSIDER YOUR REQUEST ON AN EXPEDITED BASIS.”

Industry commentators do not anticipate that the court’s order will disrupt the accounts receivable management industry, as bank garnishments (known in some states as bank levies or bank attachments) remain an infrequently used tool in the industry, typically serving as a last resort after collectors have exhausted attempts to establish a dialogue with consumers and reach a negotiated resolution.

For more detail, read the debt collection order itself, which the Texas Supreme Court issued in conjunction with a separate order that permits the eviction suits to resume.

ACA International members may find more compliance resources on our COVID-19: ACA Updates page and through our Compliance Frequently Asked Questions.

For more information on how the ACA Licensing staff can assist with your licensing needs, please contact us at Licensing@acainternational.org or call (952) 926-6547.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

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