Texas has given debt collectors an edge in court. Here’s how they can protect consumers instead.


Bank officials didn’t believe Deakon Keener when he quickly reported the bizarre charge on his credit card. They also didn’t believe Mary Keener after she proved the companies taking the charges were fraudulent.

Instead, Bank of America, like so many great institutions, has gone into full Kafka mode. The Keeners wandered through a customer service telephone maze where every attempt to resolve the matter resulted in a dead end and a rep swore they couldn’t be of help.

Bank of America debt collectors, however, acted with ruthless efficiency. They flagged the Keener’s credit reports and dispatched a processing server to deliver a lunchtime trial. The nightmare lasted for more than a year until Chronicle reporter Yamil Berard contacted a bank spokesperson.

“The bank has credited Mr. Keener’s accounts and corrected the statements from the credit bureaus,” spokesman Bill Halldin wrote in an email days after Berard requested an interview.

I’ve seen this happen dozens of times in my 29 year career. Banks, insurers, hospitals, schools and governments only wake up when a reporter calls. The threat of public ridicule drives faceless bureaucracies, but only one case at a time.

Americans should not rely on journalists to resolve these disputes. There aren’t enough of us.

Debt resolution shouldn’t be this way, and it doesn’t have to be.

After the abolition of debtors’ prisons, civil justice took over disputes over who owes whom how much money. Courts, or the threat of litigation, are meant to encourage both parties to reach a mutually beneficial settlement before lives and finances are ruined by litigation.

But Berard’s “Loads of Debt” series proves how Texas lawmakers have skewed the court system in favor of big institutions. Banks, payday lenders, insurers and hospitals no longer need to spend money on customer service representatives or empower them to resolve issues.

New laws make it easier and cheaper for businesses to obtain judgments in an overburdened legal system. The Legislature’s greatest gift to American businesses has been to grant debt collectors expanded authority to sue in justice of the peace courts.

Most justices of the peace do not have a law degree and only take a two-week course. When a low-income person without a lawyer faces off against an experienced debt collection attorney in front of an untrained justice of the peace, guess who wins? JP’s debt collection business is up 150%.

Overall, debt collection lawsuits in Texas have increased 73% from 2012 to 2021, according to Berard’s analysis. Nearly half of all civil lawsuits filed in Texas last year – more than 374,000 – sought to collect unpaid debts, cluttering cases where judges pervert justice.

Many of these disputes, like Keener’s, are unresolved. Identity theft remains a major problem, and some credit card issuers are taking shortcuts rather than investigating. Many medical debts stem from legally questionable overcharging, and payday loan companies are rampant in Texas, offering predatory loans that are illegal in most states.

Even Texas Supreme Court Chief Justice Nathan Hecht agrees the system needs to be fixed. But perhaps the better question is how to discourage debt collectors from going to court in the first place.

Only Louisiana has a higher percentage of the population in debt default, which begs the question: why are 41% of Texans behind?

Half of them owe money on medical bills. Texas has the highest percentage of uninsured people, and 48% of Texans say they find it difficult to afford health care, according to a new survey from the Episcopal Health Foundation. If Texas expanded Medicaid to cover the working poor, the bills would be much lower and nearly half of this problem would disappear.

The legislature could also lift the hurdle to sue. The nonpartisan Aspen Institute has some ideas:

Require debt collectors to document the debt, prove their claim, and establish that the debt is legally collectible when they sue, not later in the litigation.

Require that courts inform defendants of their rights and provide them with the tools to defend themselves.

Require judges and magistrates to follow an established procedure before granting a default or summary judgment.

Limit interest rates on unpaid debts.

Debt collectors go to court because they see it as a financial advantage. By protecting consumer rights, Texas can incentivize institutions to reach a fair customer service line agreement, which would allow the court to consider more serious cases.

Tomlinson writes commentary on business, economics, and politics.




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