Texas Debt Collection Laws: Protected Wages, Exposed Bank Accounts

No debt collector in Texas can touch your paycheck, your bank account, or your car over an ordinary consumer debt without following a legal process, and for the first two of those the process starts with a lawsuit. A collection agency calling about a credit card cannot garnish anything. It must sue you, win a judgment, and then use the specific collection remedies Texas law allows. Most judgments in consumer debt cases are default judgments, entered because the person sued never filed an answer, so responding to the summons is the single most valuable thing you can do. Texas then adds a twist found almost nowhere else: your wages are constitutionally protected from garnishment for ordinary debts, but the moment your paycheck lands in your bank account, that protection is gone.

Wage Garnishment in Texas: A Real Bar With Real Exceptions

Texas is one of a handful of states where an ordinary judgment creditor cannot garnish wages at all. The rule sits in three places at once. Article XVI, Section 28 of the Texas Constitution says no current wages for personal service shall ever be subject to garnishment except for court-ordered child support or spousal maintenance. Civil Practice and Remedies Code 63.004 repeats the exemption and discharges the employer from any garnishment aimed at current wages. Property Code 42.001(b)(1) lists current wages among the personal property exempt from seizure. (The Property Code's text names only child support as its exception, while the Constitution also names spousal maintenance, a drafting inconsistency between the two; the constitutional rule controls.)

That protection is genuine, but the popular version, that «garnishment is illegal in Texas», is wrong twice over. First, the state-law exceptions are built into the text: court-ordered child support and spousal maintenance orders reach Texas wages. Second, federal law does not ask Texas for permission. The U.S. Department of Education and other federal agencies can garnish up to 15% of disposable pay administratively for defaulted student loans and other federal debts, with no court judgment, and the Department of Labor confirms that this federal administrative garnishment operates without regard to state garnishment laws. IRS wage levies work the same way. If your paycheck is being taken in Texas, one of those regimes is almost certainly the reason.

Texas has no state income tax, so there is no state revenue-department wage levy to worry about. Federal law protects you from being fired over a garnishment for any one debt, and Family Code 8.208 separately bars firing over a spousal maintenance withholding order, but Texas has no broader statute protecting an employee whose pay is garnished for multiple debts.

The Bank Account Exception: Wages Lose Protection the Moment They Are Deposited

This is the most important and least understood rule in Texas collection law. The constitutional exemption covers «current wages», and Texas courts read that phrase literally: wages are current only until they are paid. In Fitzpatrick v. Leasecomm Corp. (Texas Court of Appeals, Tyler, 2008), the debtor argued that her electronically direct-deposited paycheck kept its exempt character in her credit union account. The court rejected the argument, holding that wages cease to be current and lose their exempt status immediately upon being paid to and received by the wage earner, and that a direct deposit is no different in legal effect from walking a paper check to the bank. The deposited wages became subject to garnishment the moment they hit the account.

The practical upshot: a judgment creditor who could never send a garnishment writ to your employer can send one to your bank under Civil Practice and Remedies Code Chapter 63. The writ freezes the account while the case is sorted out, and money that started as wages generally has no special claim to come back. Texas law does not appear to provide a self-executing dollar-amount shield for bank deposits the way some states do. What does stay protected in a bank account: directly deposited federal benefits such as Social Security, which federal banking rules require the bank to protect automatically up to the last two months of deposits, and funds you can trace to categories the Property Code exempts. Timing matters enormously with a frozen account, so if a bank writ lands, treat it as urgent rather than waiting to see what happens.

How Long Can You Be Sued: The Four-Year Rule

Most Texas debt claims expire quickly by national standards. Civil Practice and Remedies Code 16.004(a)(3) gives an action for debt 4 years from accrual, and 16.004(c) gives actions on open or stated accounts 4 years from when the dealings cease. Credit card debt falls inside the 4-year window under either theory. Promissory notes run longer: Business and Commerce Code 3.118(a) allows 6 years from the due date (or accelerated due date), and a demand note with no demand ever made is barred after 10 years with no payment of principal or interest.

Two cautions apply everywhere, including Texas. A time-barred debt is not an erased debt: the collector may still ask you to pay, and federal Regulation F only forbids suing or threatening suit on it. And credit reporting runs on its own separate clock, generally seven years, so a debt can vanish from your credit report while still being inside the statute of limitations, or the reverse.

Time-Barred Debt: Texas Draws a Hard Line for Debt Buyers

What happens if you make a payment on an old debt is where Texas law splits sharply by who owns the debt.

If the debt has been sold to a debt buyer, Finance Code 392.307 (enacted in 2019) makes expiration permanent. A debt buyer may not sue or start arbitration on a consumer debt once the limitations period under Section 16.004 or Business and Commerce Code 3.118 has run, and the statute says the cause of action is not revived by a payment, an oral or written reaffirmation, or any other activity on the debt. Even a signed writing changes nothing. The debt buyer must also tell you, in its first written communication, that because of the age of the debt it will not sue you for it.

If the original creditor still owns the debt, the older rule in Civil Practice and Remedies Code 16.065 applies: an acknowledgment of a time-barred claim revives it only if it is in writing and signed by the person to be charged. A payment alone, without a signed writing, is not a signed acknowledgment under that section's text.

The practical takeaway is unusually clean for Texas: paying a debt buyer on an out-of-statute debt cannot restart the clock, and no one should tell you otherwise. With an original creditor, be careful what you sign.

What a Collector May Not Do: The Texas Debt Collection Act

Section 392.307 is one provision of a much larger statute. Finance Code Chapter 392, the Texas Debt Collection Act, is the state law that sets the rules of collector conduct alongside the federal Fair Debt Collection Practices Act, and four of its sections define what is off limits.

Section 392.301 forbids threats and coercion, including threatening violence, falsely accusing you of a crime, and threatening arrest or property seizure without the court proceedings that would actually be required. Section 392.302 forbids harassment and abuse: profane or obscene language, repeated calls made to annoy, calls placed without disclosing who is calling, and causing you to incur communication charges. Section 392.303 forbids unfair or unconscionable means, including collecting charges that no agreement and no law authorizes. Section 392.304 forbids fraudulent, deceptive, or misleading representations across nineteen listed categories, among them using a false name, misrepresenting the character, amount, or status of the debt, sending documents made to resemble court papers, and falsely implying that a lawyer is involved.

There is also a threshold question most people never think to ask. Under Section 392.101, a third-party debt collector or credit bureau may not engage in debt collection at all unless it has obtained a $10,000 surety bond from a surety company authorized to do business in Texas, with a copy of the bond filed with the secretary of state. A collector working your account without that bond on file is collecting unlawfully, and the secretary of state's records are where that gets confirmed.

The enforcement side sits in Sections 392.403 and 392.404, and it is the part worth knowing. Section 392.403 lets you sue for injunctive relief to stop or prevent a violation and for the actual damages the violation caused, and a plaintiff who prevails recovers attorney's fees reasonably related to the work performed, plus costs; for violations of the bond requirement in 392.101, of Section 392.202, or of Section 392.301(a)(3), the statute sets a floor of not less than $100 for each violation. Section 392.404 then goes further: a violation of Chapter 392 is a deceptive trade practice under Subchapter E, Chapter 17 of the Business and Commerce Code, and is actionable under the DTPA, which carries its own remedies. In practice that combination is why a Texas collector's conduct is worth documenting as it happens, with dates, times, and what was said.

Car Repossession in Texas

Texas gives car lenders the standard self-help remedy with no cure period in front of it. Under Business and Commerce Code 9.609, a secured lender may repossess after default without going to court, so long as it proceeds without breach of the peace. There is no Texas statute requiring advance notice of repossession or giving you a set number of days to catch up after a missed payment; Finance Code Chapter 348, which governs motor vehicle installment sales, contains no right-to-cure provision. Whatever grace period exists comes from your contract, not from the state.

What Texas law does regulate: Finance Code 348.411 forbids a vehicle installment contract from authorizing the creditor to enter your premises in violation of the commercial code or to commit a breach of the peace during repossession, and it bars the contract from appointing the lender as your agent for repossession. Section 348.412 voids any contract clause waiving your right to sue over illegal collection or repossession conduct.

The notice you do get comes after the car is gone, and it is the step readers most often miss. Once the lender intends to sell the vehicle, Business and Commerce Code 9.611(b) and (c) require it to send the debtor and any secondary obligor a reasonable authenticated notification of the disposition. Because a car bought for personal use is consumer goods, Section 9.614 controls what that notice has to contain: the general contents listed in 9.613(1), a description of any deficiency liability, a telephone number where you can get the exact amount needed to redeem the car, and a contact point for further information about the sale and the debt. Section 9.614 also supplies a safe-harbor form headed «NOTICE OF OUR PLAN TO SELL PROPERTY». Until that sale actually happens, Section 9.623 gives you the right to redeem the collateral by tendering the full amount owed, not merely the past-due payments, together with the lender's reasonable expenses and attorney's fees.

After the repossession, the sale of the car must be commercially reasonable in every aspect under Section 9.610, and Section 9.615 makes you liable for any deficiency, the gap between what the sale brings and what you owed, while requiring any surplus to be paid back to you. If the lender or a related party buys the car at a lowball price, the deficiency is measured against what an arm's-length sale would have brought. Where the lender skipped a step, Section 9.625 makes it liable for the loss its noncompliance caused, and for consumer goods it sets a minimum recovery of the credit service charge plus 10 percent of the principal amount of the obligation. How a missing notice affects the deficiency itself in a consumer transaction is left to the courts rather than fixed by statute: Section 9.626 applies its rules to non-consumer transactions and says expressly that the limitation is meant to leave the consumer question to judicial development. Servicemembers who signed the contract before entering military service cannot have the vehicle repossessed without a court order under the federal SCRA.

If You Are Being Garnished or Sued in Texas

Start with the paperwork. If you have been served with a lawsuit, file an answer by the deadline even if you think the debt is legitimate, because a default judgment gives the creditor every collection tool at once and forfeits defenses like an expired statute of limitations, which a court will not raise for you. If the suit is on old debt, check the 4-year clock and, if a debt buyer is suing, whether Finance Code 392.307 bars the case outright.

If your bank account has been frozen by a garnishment writ, act immediately: identify every exempt dollar in the account (federal benefits, insurance proceeds, other exempt categories) and assert the exemptions with the court handling the writ. If your paycheck itself is being garnished, identify which regime is doing it, because the response differs completely between child support, federal student loan garnishment (which has its own hearing rights and a 30-day notice requirement), and an IRS levy. If the problem is the collector's behavior rather than the judgment, Chapter 392 gives you a cause of action with attorney's fees attached, so keep a dated record of the calls and letters. And if judgments and frozen accounts are stacking up faster than they can be dealt with one at a time, a bankruptcy filing stops garnishment and collection through the automatic stay while the underlying debts are resolved; whether that trade is worth it depends on your whole financial picture, and it is worth a professional's eyes.

Information last verified on 2026-08-12. This article has not yet been reviewed by a licensed lawyer.

Related Resources

For the national picture, see debt collection laws by state, statute of limitations on debt, how to stop wage garnishment, and car repossession laws. Social Security and other federal benefits have their own protection rules, covered in can Social Security be garnished. For deadlines on other Texas claim types, see the Texas statute of limitations, and if the debts themselves have become unmanageable, Texas bankruptcy explains the state's famously generous exemptions.

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Last updated: 2026-08-12.

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