Judgement against Homestead in Texas.

I have a third party collector claiming they can get a judgement against my homestead. The TPC claimed that if I ever sold my home then I would have to pay the judgement out of the sales receipts. I thought homesteads were exempt in Texas and up to $60,000 worth of exempt property was exempt also. I have paid and continue to try and pay many of my bills since losing my job but this TPC is trying to play hardball and I do not have the assets to meet their demands. This debt in question is past the 4 year statute of limitations but the TPC says they are still going to take me to court to get a judgement.

They are claiming that a credit card debt that was sold in April of 2002 does not reach the SOL until April 2007. As I have been told here and what I researched this is baloney.

Thanks,

Bear324

Perhaps an attorney could explain it better, but my understanding of the homestead exemption is that it exempts the equity up to the limit. So, if your equity in your home is $100,000 and you sell it, you can exempt the first $60,000, but the other $40,000 potentially is fair game. The collection agency would have to get a judgment and the slap a lien against your house.

Please note that the existence of such a lien might "scare off" many potential buyers, should you decide to sell your home.

Now, if the equity that you have in your home is less than $60,000, you probably have nothing to worry about.

I have not researched the statute of limitations (SOL) for TX. But, virtually everywhere the SOL is an affirmative defense that you have to raise in court IF you get sued. Therefore, the collection agency can, in fact, sue and seek to get a judgment against you. If you ignore the summons and do not raise this defense, the collection agency could indeed get a default judgment against you. The SOL does NOT protect you from getting sued. It only gives you a defense that you must assert IF you do get sued. You would also have to present arguments as to why you think the SOL starts on a more remote date in the past than the collection agency thinks/states.

That being said, going to court is expensive for a collection agency especially when there is no real certainty of a quick "payoff". Collectors say lots of things to get debtors to send the rent or mortgage money toward the debt which they are trying to collect on. Most of these people work on commission. They don't care one "twit" about your other obligations. Sometimes these collectors "stretch" the truth.

If you don't find that this collection agency is willing to work with and talking to them over the phone is simply "raising your blood pressure", then send them a certified letter, return receipt requested, stating that they are only to contact you in writing about this debt.

Be vigilant. Do NOT ignore any court summons that you should recieve. But, I would guess that most of these threats are "bluffs" and that you won't get sued. Obviously, I cannot guarentee that the collection agency won't make good on its threats.

Slight correction on the explanation of homestead protection.

Texas's homestead exemption has no limit on dollar value of the homestead with a 10 acres limit inside a municipality (the urban homestead).

Homesteads are generally not subject to attachment, execution, or forced sale by creditors.

The practical protections of the Texas homestead laws prevent any creditor (except for the mortgage holder, a taxing authority, or the holder of a note created for a home improvement loan) from forcing the sale of the homestead to satisfy nonpayment of a debt.

For further information see Tex. Const. art. XVI, § 50, Prop. Code § 41.001 at:

www.findlaw.com

So the creditor cannot put a lien on your home.

However, the creditor can certainly record a copy of the judgment against you and that could effect the sale or refininancing of the home at some point in the future. I haven't gone that far into this.

Jack is correct. Here is the explanation I received from a title company in Texas.

In most states homestead is a matter of public record. In Texas, homestead is a state of mind.

The judgment does not really attach to your home although it is a public record.

But, the practical rub is that no title company will write a title policy for a buyer of your home until the judgment goes away. Title companies take this position since they "can't read your mind" and thus are unwilling to take the financial risk that the subject property is not your homestead and thus cause a claim on the title policy.

Without re-reading your entire post, you said this debt is OOS. SOL in Texas is 4 years from the date of first default. So, if this debt is truly OOS, then seems to me you should hang your hat on that fact and ignore the rest of the noise about judgments and homestead.

You can be sued on debt that is OOS. If you fail to respond properly to the lawsuit, the creditor will be awarded a default judgment. At that point, you lose your OOS argument since the judgment now has a life of its own.

If you do respond properly, then the judge will toss the case.

Many debtors in this situation will write a letter to the creditor. The letter will say something like "this debt is time-barred under the statues of TX" and "cease and desist all contact with me". Of course, the letter should be sent certified mail and a return receipt.

With or without such a letter one would be wise to be alert for the filing of a lawsuit or receipt of a summons. Never, ever ignore one of those.