Government

Texas Attorney General Abbott: Debt collector threatens license suspension

April 13, 2006

AUSTIN, June 30, 2003—A central Texas woman complained to our office about a notice she received from a company purporting to be a collection agency. The company informed her that DPS was about to suspend her driver's license due to unpaid "damages" resulting from a car wreck the previous year, and offered to help her avoid license suspension - presumably by sending partial or full payment of the outstanding amount of almost $2000.

The consumer had never been in a car wreck and wisely contacted both DPS and the insurance company that allegedly handled the claim. Neither DPS nor the insurance company could verify the information, and the collection agency failed to produce evidence, even while continuing to threaten the consumer with the loss of her driving privileges.

Eventually the company backed down, claiming the debt was owed by another person with the same name.

Unethical debt collection agencies have been known to threaten all kinds of consequences that they cannot actually bring down on the consumer, even when the debt is legitimate.

For example, some collectors threaten to foreclose on homesteads or to garnishee wages. In Texas, a homestead cannot be taken to pay a debt unless the debt is from the purchase of the home, home improvements, home equity loans, or to pay certain taxes.

Wages may be garnisheed only to pay court-ordered child support, back taxes, or defaulted student loans.

The only debt for which you can lose your driver's license is court-ordered child support. For more information about what debt collectors may or may not do under state and federal law, see our online debt collection [link] page.

Consumers are also cautioned that whenever they are contacted about a debt they know nothing about, identity theft is a possibility to consider. For more information, visit the Attorney General's ID Theft page at http://www.oag.state.tx.us/consumer/idtheft.shtml .