What are the Key Steps in the Texas Debt Collection Process?

Running a small business is already a challenge—you have a million things on your plate, you are trying to keep up with the competition, and then there is that one client who “forgot” to pay. Chasing unpaid invoices should not be your second job, yet here we are. The fact is that over half of all invoices in the U.S. are paid late, which shows just how common this problem is for business owners.

If you have been having a hard time collecting your debt, you are not alone, and unfortunately, the Texas debt collection process can feel very slow and exhausting at first. So in today’s LinkedIn post, I will explain the main steps in the Texas debt collection process. Whether you are a small business owner looking for some tips or here out of curiosity, this post will help you cut through the noise and plan your next steps.

Texas debt collection rules

The debt collection process in Texas is bound by specific rules and regulations in order to ensure fairness for both creditors and debtors. The state laws and the federal Fair Debt Collection Practices Act (FDCPA) exist to keep the process clean, not to make collecting harder. These laws prohibit creditors from sending late-night “friendly” reminders or spammy messages.

If you run a small business, working with a debt collection agency for small businesses can help you understand all the relevant rules and regulations and keep yourself out of trouble.

We are not saying you can’t handle the debt collection on your own. You can certainly call the debtor, send some emails, or maybe even slap a “final notice” stamp on a letter. But when those attempts fail (which they often do), are you ready to deal with all the red tape and still manage your business? This is why you must consider hiring a professional collection agency. They can take care of those late payments while you focus on managing your day-to-day business operations.

Steps to recover unpaid debts in Texas

Collecting unpaid debts in Texas is no walk in the park, but it is not very complicated either.

Debt collectors will first contact the debtor through phone calls or written notices. This makes sure the debtor knows what they owe and gives them a chance to settle the debt voluntarily. In fact, the FDCPA makes it mandatory to send a written notice within five days of the first contact, explaining who the debtor is and how much they owe.

But if communication attempts fail and your non-paying clients are still not jumping at the chance to settle their debts, the next step is usually to negotiate a repayment plan or settlement. An experienced collection agency in Dallas will try to find a mutually agreeable resolution that lets the debtor pay what they can afford. Sometimes, they might even agree to accept a lower amount if the debtor is unable to pay the full amount.

If the debtor still does not respond to payment demands or outright refuses to pay, you could pursue legal action. Suing someone to recover unpaid debts is not fun, fast, or cheap, but sometimes it is the only way forward. So before you file a lawsuit, ask yourself if it makes financial sense to you. For smaller amounts, it might not be. An experienced debt collection agency can help you decide if pursuing court action will pay off or if it is time to cut your losses and move on.

Protect your business with compliant practices

Debt collection in Texas and the rest of the U.S. is heavily regulated. Laws like the FDCPA establish clear guidelines for what debt collectors can and can’t do. For example, they cannot use abusive language, make threats, or call debtors in the middle of the night. A survey from the Consumer Financial Protection Bureau (CFPB) shows that more than 25% of complaints about debt collection involve harassment, which is a problem you can avoid by working with professionals who strictly follow the rules.

When you work with an experienced debt collection agency, you also avoid the risk of ruining your relationships with clients over an unpaid invoice. You have spent years building these connections, so you are going to want to keep them intact. An experienced debt collection agency can handle the entire process while keeping your business image clean.

Get professional help collecting your unpaid invoices

If your business is struggling with unpaid debts and cash flow issues, reach out to Williams, Rush & Associates LLC. Our experienced team is all too familiar with the challenges small businesses face, and we are here to help you handle those accounts that refuse to pay.

Contact us today to learn more about our services and how we can help you recover what you are owed. You can also click here to read other helpful LinkedIn posts about debt collection for small businesses.