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:

Texas Finance Code Chapter 392 (Debt Collection Act) — third-party collector requirements, bond/registration, penalties
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)
Texas Government Code Chapter 2253 (McGarr Act) — public works payment bonds: 90-day notice, 1-year suit deadline, bond claim vs. lien
Limited Power of Attorney — TX Estates Code § 751.0021, writing/notarization requirements, specific language; must exclude direct lien filing authority
Fee structures — Texas has no statutory cap on contingency fees, but must be disclosed in writing
Statute of Limitations — 4 years for written contracts, promissory notes, open accounts; 2 years for tort claims
Service of Process — Certified mail (restricted delivery) valid under TRCP 106(a)(2); personal service required if mail fails
FDCPA — Full 15 USC § 1692 compliance including validation notice within 5 days, Mini-Miranda, cease communication protocols
TCPA — Prior express consent for autodialed calls to cell phones; manual dialing only; 3-call-per-7-day cap
Data Privacy — TX Bus. & Com. Code § 521 breach notification within 60 days; AG notice if 250+ affected; GLBA Safeguards
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:

A bold DRAFT — FOR LEGAL REVIEW ONLY disclaimer at top and bottom
A review checklist item for the attorney (arbitration enforceability, FDCPA carve-outs, TX Data Privacy Act interpretation, retention under debt collection law)
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

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