---
name: debt-recovery-compliance
description: "Research, document, and operationalize Texas debt recovery compliance — regulations, internal policy manuals, Terms of Service, Privacy Policies, and operational procedures for a Limited Power-of-Attorney-based debt collection business. Covers the full recovery workflow including mechanic's lien escalation as Tier 2.5."
version: 1.2.0
author: ShoNuff
tags: [debt-recovery, texas-law, compliance, fdcpa, legal-drafts, dre]
---

# Debt Recovery Compliance (Texas)

Research and documentation framework for Debt Recovery Experts (DRE), a Texas-based debt recovery business operating under a Limited Power of Attorney (LPOA) model.

## Legal Research Workflow

When researching Texas debt recovery law, delegate to a subagent designated as "research expert" with these specific goals:

1. **Texas Finance Code Chapter 392** (Debt Collection Act) — third-party collector requirements, bond/registration, penalties
2. **Texas Property Code Chapter 53** (Mechanic's & Materialman's Liens) — who can file, deadlines, pre-lien notices, homestead restrictions, enforcement (see references/mechanics-lien.md)
3. **Texas Government Code Chapter 2253** (McGarr Act) — public works payment bonds: 90-day notice, 1-year suit deadline, bond claim vs. lien
4. **Limited Power of Attorney** — TX Estates Code § 751.0021, writing/notarization requirements, specific language; must exclude direct lien filing authority
5. **Fee structures** — Texas has no statutory cap on contingency fees, but must be disclosed in writing
6. **Statute of Limitations** — 4 years for written contracts, promissory notes, open accounts; 2 years for tort claims
7. **Service of Process** — Certified mail (restricted delivery) valid under TRCP 106(a)(2); personal service required if mail fails
8. **FDCPA** — Full 15 USC § 1692 compliance including validation notice within 5 days, Mini-Miranda, cease communication protocols
9. **TCPA** — Prior express consent for autodialed calls to cell phones; manual dialing only; 3-call-per-7-day cap
10. **Data Privacy** — TX Bus. & Com. Code § 521 breach notification within 60 days; AG notice if 250+ affected; GLBA Safeguards
11. **FCRA — Credit Bureau Reporting** — 15 U.S.C. § 1681s-2 furnisher duties, pre-reporting contact (FDCPA + CFPB Rule), § 1681s-2(b) private right of action, B2B vs consumer distinction, Texas Ch. 392 § 392.202 dispute overlay (see references/credit-bureau-reporting.md)

## Research Issues (Texas Legislature)

The Texas Legislature website (capitol.texas.gov) is a JavaScript SPA that blocks curl/scraping. Use:
- **ScrapingAnt** with `browser=true` for JS-heavy government sites
- **Cornell LII** (law.cornell.edu) for federal statute plain-text access
- **Justia** (justia.com) for Texas-specific case law
- All drafts must be flagged: **⚠️ DRAFT — Requires Texas Attorney Review**

## ⚠️ Critical Lien Research Pitfalls

| Pitfall | Why It Matters |
|---------|---------------|
| **Texas deadlines are the strictest in the US** | Subcontractors: 15th day of 3rd month after completion. GCs: 15th day of 4th month. One day late = lien void. Always compute from the month of completion, not the date. |
| **Pre-lien notice is mandatory** | Subs must send notice within 15 days of first furnishing (commercial) or by 15th of 2nd month (residential). Missing it caps lien to retainage or voids it entirely. |
| **DRE cannot file liens directly** | Filing a lien affidavit is UPL (Unauthorized Practice of Law) and triggers FDCPA liability. DRE may send pre-lien notices (factual, template-based) but must refer actual filings to a licensed Texas construction attorney. |
| **Homestead protections are strong** | Lien requires written contract signed by both spouses before work begins. Even then, 3-year redemption period makes foreclosure costly. Avoid for claims under $25K. |
| **No lien on public projects** | Use bond claims under McGarr Act (90-day notice, 1-year suit deadline) instead. |
| **Wrongful lien damages** | TX Prop. Code § 53.152 — filing without reasonable basis = actual damages + attorney's fees + up to $10K exemplary. Always have attorney validate before recording. |

## ⚠️ Critical FCRA / Credit Bureau Reporting Pitfalls

| Pitfall | Why It Matters |
|---------|---------------|
| **Pre-reporting contact is mandatory for consumer debts** | FDCPA + CFPB Rule requires contact (phone, letter, in-person, or electronic) BEFORE reporting. Validation notice satisfies this. Reporting without contact = FDCPA violation. |
| **30-day dispute window blocks reporting** | If consumer disputes in writing within 30 days of validation notice, DRE cannot report until debt is verified and sent to consumer. CFPB interprets "cease collection" to include credit bureau reporting. |
| **§ 1681s-2(b) private right of action** | Consumers CAN sue DRE for failing to properly investigate a CRA-notified dispute. § 1681s-2(a) (direct furnisher errors) is gov't enforcement only — but § 1681s-2(b) is NOT. Actual + statutory ($100–$1,000) + punitive + attorney's fees. |
| **Corporations have no consumer credit file** | Reporting a purely corporate B2B debt to Equifax/Experian/TransUnion is impossible — those bureaus only maintain individual credit files. Use D&B Global Trade Exchange instead. |
| **Texas § 392.202 dispute is stricter than FCRA** | 30-day response, 5-business-day correction, provisional correction if more time needed, cease collection during dispute — and violation is a criminal misdemeanor ($100–$500) + DTPA treble damages. |
| **Personal guarantee must be in writing** | Without a signed, written personal guarantee, DRE has no permissible purpose to report against an individual for a B2B debt. Oral guarantees are insufficient under FCRA. |
| **B2B debt + consumer PII = dangerous mix** | If DRE reports a B2B debt to a consumer CRA using the individual's name/SSN, this can trigger FCRA liability if there's no personal guarantee on file. |

## Credit Bureau Reporting Research (Jul 8, 2026)

Full analysis at `references/credit-bureau-reporting.md` (quick reference) and `/root/.hermes/references/dre-credit-reporting.md` (25.7KB, 10 sections).

**Strategic recommendation:** Include personal guarantee language in all future DRE client contracts. This unlocks consumer bureau reporting as a leverage tool on B2B debts. For purely corporate debts without guarantees, use D&B Global Trade Exchange.

## Deliverables

### Internal Policy/Procedure Manual
Located at `/root/DRE_Compliance_Manual.md` — 23 sections covering:
- Claim intake and verification
- Document handling and retention
- Communication protocols with debtors
- Escalation and dispute procedures
- Attorney/paralegal review triggers
- Fee calculation and disclosure
- Disbursement procedures
- Data retention schedules (7 years financial, 5 years claims)
- **Section 22 — Mechanic's Lien & Bond Claims (Tier 2.5)** — pre-lien notice workflow, attorney referral, lien filing through outside counsel, bond claim procedures, risk management

### Terms of Service
Located at `/root/TERMS_OF_SERVICE_DRAFT.md` — 17 sections:
- Business model: claim submission → LPOA via RON → collection → fee deduction → disbursement
- Binding arbitration (AAA, Travis County, TX)
- Liability cap at lesser of fees paid or $500
- Indemnification in DRE's favor
- FDCPA / Texas Finance Code compliance
- Service of process via certified mail

### Privacy Policy
Located at `/root/PRIVACY_POLICY_DRAFT.md` — 15 sections:
- Data categories: account, claim/financial, communications, notarization, cookies
- Third-party sharing table with provider types and data shared
- Security measures (TLS, AES-256, MFA)
- User rights (access, correction, deletion)
- Texas Data Privacy and Security Act compliance

## Recommendation on Legal Review

Every draft document MUST carry:
1. A bold **DRAFT — FOR LEGAL REVIEW ONLY** disclaimer at top and bottom
2. A review checklist item for the attorney (arbitration enforceability, FDCPA carve-outs, TX Data Privacy Act interpretation, retention under debt collection law)
3. The business model (LPOA-based collection) should be explicitly reviewed for whether it qualifies as "debt collection" under Texas law

## Research Documents Created (Jul 7, 2026)

| File | Type | Purpose |
|---|---|---|
| `/root/DRE_Compliance_Manual.md` | Internal policy | 23-section operations manual (v1.1 — includes §22 Mechanic's Lien & Tier 2.5) |
| `/root/TERMS_OF_SERVICE_DRAFT.md` | Legal draft | Client-facing ToS |
| `/root/PRIVACY_POLICY_DRAFT.md` | Legal draft | Client-facing privacy policy |
| `/root/data-broker-removal-action-plan.md` | Action plan | Personal data removal from 50+ people-search sites |
| `/root/web-scraping-api-comparison.md` | Research | Web scraping API comparison (ScrapingAnt, Tavily, etc.) |
| `/root/api-research-report.md` | Research | RON + certified mail API research |
| `/root/documenso-vs-docuseal-comparison.md` | Research | Digital signature platform comparison |
| `/root/Texas_Mechanics_Lien_Research_Report.md` | Research | 18-section mechanic's lien report: TX Property Code Ch. 53, deadlines, notice requirements, homestead rules, FDCPA/UPL, Tier 2.5 workflow, cost-benefit analysis |
| `/root/.hermes/references/dre-credit-reporting.md` | Research | 10-section FCRA + Texas credit bureau reporting analysis: B2B vs consumer, furnisher duties, Ch. 392 overlay, business bureaus, liability risks, practical recommendations |
