I often call consumer attorney Dana Karni for answers to some of your questions. Last week she called me because she is concerned about a bill before the Texas Legislature right now. I asked her to make an appearance on the blog to tell you all about it.
“Texas State Senator Duncan sponsored the bill that proposes to penalize consumers who pay on their old debt. Earlier this week that bill was voted out of committee. In effect, the bill will change the statute of limitations on consumer debt. Under the current law, if a consumer misses a payment on a contract such as a credit card, he is considered in “default.” The bank is usually authorized to slap on a higher interest rate, late fees and penalties. Or, the bank can sue the consumer within four years. If the consumer makes a small payment that – by itself – does not necessarily renew the clock.
But consider this: the proposed bill, CSSB 1456 renews the four-year clock every time the consumer makes a payment, even a token payment, even one dollar. The result? Texas consumers might be duped into making a small payment many years after they originally defaulted, only to find themselves opening the door to a lawsuit that otherwise might be stale. If this proposed bill passes the Texas House of Representatives, in all likelihood debt buyers and debt collectors will have a new motivation for getting consumers to pay anything on a debt.
In an effort to oppose this bill, Texas consumers should write or call their state legislators. If you do not know who your State Senator or Representative is, click here to find out.”
Dana Karni is an attorney in Houston. Her primary focus is on consumers’ rights against abusive debt collectors. Ms. Karni is a frequent speaker on the Fair Debt Collection Practices Act. She is also an adjunct professor at the University of Houston where she teaches Practicing Consumer Law. Ms. Karni is on the board of directors with the Houston Bar Association Commercial and Consumer Law Section and is a member of Ethics Committee for the National Association of Consumer Advocates. More information is available at: www.TexasConsumerDebt.com.