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Texas Law and Time Barred Debt

Texas Law and Time Barred Debt

Most Texans have some form of debt, be it a mortgage, credit cards, medical bills, or student loan payments. Most of us, in fact, have some combination of these debts. Recently, Daic Law has received questions about Texas law and time barred debt – what it means, and how it affects consumers. Our debt defense lawyer will provide a summary to help you better understand what time barred debt means.

What is Time Barred Debt?

Time barred debt is debt that falls outside the statute of limitations for collection. When a debt is time barred, the creditor can no longer file a lawsuit against the debtor to attempt to collect the debt. You should be aware that consumers still owe the debt even if it is time barred. And creditors can still contact you to attempt to collect. They cannot, however, file a lawsuit against you. This is important because if a creditor sues you, they could ‘win’ or obtain a default judgment, which can result in your bank account being garnished or your property being seized.

What is the Statute of Limitations for Debt in Texas?

Unfortunately, sometimes debt gets out of hand and we face the inevitable debt collector or debt collection agency. Many consumers do not realize, however, that there is a statute of limitations on debt collection in Texas. The statute of limitations follows guidelines in the Texas Debt Collection Act, including placing a timeframe in which creditors or debt collectors can file a lawsuit in pursuit of debt recovery.

According to Texas law, creditors have four years to collect on a debt before it becomes time barred. The statute of limitations and, therefore, the four year period begins at the time of the last payment or first default.

Texas Law and Time Barred Debt

In Texas, there are two primary pieces of legislation that relate to time barred debt. Those are Section 16.004 of the Texas Civil Practice and Remedies Code, and Section 392.307 of the Texas Finance Code.

Section 16.004 of the Texas Civil Practice and Remedies Code says,

“A person must bring suit on the following actions not later than four years after the day the cause of action accrues:

  1. specific performance of a contract for the conveyance of real property;
  2. penalty or damages on the penal clause of a bond to convey real property;
  3. debt;
  4. fraud; or
  5. breach of fiduciary duty.”

Section 392.307 of the Texas Finance Code says,

“(c) A debt buyer may not, directly or indirectly, commence an action against or initiate arbitration with a consumer to collect a consumer debt after the expiration of the applicable limitations period provided by Section 16.004, Civil Practice and Remedies Code, or Section 3.118, Business & Commerce Code.”


Previously, Texas law allowed certain actions to restart the clock on the statute of limitations. However, this had a negative consequence called zombie debt. In 2019, new laws were passed to protect consumers from zombie debt.

How to Tell if Your Debt is Time Barred

Many consumers don’t know what the statute of limitations is for certain debts. It is often out of sight, out of mind, which can be problematic if you run into a debt collection or lawsuit situation. So how do you tell if your debt is time barred?

There are a few things you can do to find out:

  • Get a copy of your credit report. This will show you the date you obtained the debt, payment information, and account status.
  • Determine your last payment. Look back through your records to determine when your last payment was made for the debt in question. The date of your last payment is often the date the statute of limitations begins.
  • Look up the statute of limitations in your state. Each state has different rules and statutes of limitations for debt-related matters. Look into the laws in your state. If you need help, contact a debt defense lawyer for help.

How to Manage Time Barred Debt

If you determine that you do have time barred debt, your next step is determining how you want to manage it. There are a few options you can consider to resolve your debt:

  • Pay Nothing: If you don’t pay a time barred debt, you cannot be sued. However, the creditor can still attempt to collect a debt. The debt can still remain on your credit report for seven years, which makes your credit score lower and can impact your ability to obtain new credit.
  • Settle the Debt: You can also negotiate with your creditor to settle the debt. Often, this process includes agreeing to an amount less than what you owe in exchange for discharge of the remaining debt. You may be asked for a lump sum payment or a payment plan. It is a good idea to speak with a debt defense lawyer before attempting to negotiate on your own.
  • Bankruptcy: Another way to resolve outstanding debt is to file bankruptcy. Chapter 7 and Chapter 13 bankruptcy each allow consumers options to resolve their debt in a fair and affordable way. Your situation, income, expenses, and other factors will determine which type of bankruptcy is right for you.

If a lawsuit has been filed against you and you believe that the debt is time barred, you should contact a debt defense lawyer as soon as possible. You may have options to resolve your debt without the negative consequences of a lawsuit or judgment.

Have Questions about Texas Law and Time Barred Debt?

If you have questions about Texas law and time barred debt, the best way to get help is by contacting a skilled debt defense or debt collection lawyer. At Daic Law, we help thousands of clients every year successfully resolve debt and regain their financial independence. We understand that debt is difficult, and we offer simple and affordable solutions that work for you.

Contact us today to learn how we can help you resolve your debt-related matter. Schedule a free consultation at the bottom of your screen, or call us at 877-893-6040.