37 Tex. Admin. Code § 385.9969 - Collection of Delinquent Obligations
(a)
Purpose. This rule sets forth procedures to establish and determine the
liability of each person responsible for an obligation to the Texas Juvenile
Justice Department (TJJD), whether that liability can be established by
statutory or common law. This rule also establishes procedures for collecting
delinquent obligations pursuant to §
2107.002 of the Texas
Government Code.
(b) Applicability.
This rule does not apply to delinquent obligations for child support, which are
processed according to §
385.9967 of this title.
(c) Definitions. The following words and
terms have the following meanings when used in this rule.
(1) Attorney general - The Office of the
Attorney General of Texas, acting through its Bankruptcy and Collections
Division.
(2) Debtor - Any person
or entity liable or potentially liable for an obligation owed to TJJD or
against whom a claim or demand for payment has been made.
(3) Delinquent - Payment is past due by law
or by customary business practice, and all conditions precedent to payment have
occurred or been performed.
(4)
Make demand - To deliver or cause to be delivered by first class United States
mail a writing setting forth the nature and amount of the obligation owed to
TJJD.
(5) Demand letter - A writing
making demand.
(6) Obligation - A
debt, judgment, claim, account, fee, fine, tax, penalty, interest, loan,
charge, or grant.
(7) Security -
Any right to have property owned by an entity with an obligation to TJJD sold
or forfeited in satisfaction of the obligation; and any instrument granting a
cause of action in favor of the State of Texas and/or TJJD against another
entity and/or that entity's property, such as a bond, letter of credit, or
other collateral that has been pledged to TJJD to secure an
obligation.
(d)
Procedures for Collecting Delinquent Obligations.
(1) When TJJD determines the liability of
each person responsible for an obligation, whether that liability can be
established by statutory or common law, TJJD's collection procedures shall
apply to every debtor, subject to reasonable tolerances established by
TJJD.
(2) TJJD records shall
contain and reflect the identity of all persons liable on the obligation or any
part thereof.
(3) TJJD records
shall reflect the correct physical address of the debtor's place of business,
and, where applicable, the debtor's residence. Where a fiduciary or trust
relationship exists between TJJD (or the state) as principal and the debtor as
trustee, an accurate physical address shall be maintained. A post office box
address should not be used unless it is impractical to obtain a physical
address or the post office box address is in addition to a correct physical
address maintained on TJJD's books and records.
(4) Demand letters shall be mailed in an
envelope bearing the notation "address correction requested" in conformity with
39 Code of Federal Regulations, Chapter III, Subchapter A, Part 3001, Subpart
C, Appendix A, §911. If an address correction is provided by the United
States Postal Service, the demand letter shall be re-sent to that address prior
to the referral procedures described herein. Demand shall be made upon every
debtor prior to referral of the account to the attorney general. The final
demand letter shall include a statement, where practical, that the debt, if not
paid, will be referred to the attorney general.
(5) Where state law allows TJJD to record a
lien securing the obligation, TJJD shall file the lien in the appropriate
records of the county where the debtor's principal place of business, or, where
appropriate, the debtor's residence, is located or in such county as may be
required by law. The lien shall be filed as soon as the obligation becomes
delinquent or as soon as is practicable. After referral of the delinquency to
the attorney general, any lien securing the indebtedness may not be released,
except on full payment of the obligation, without the approval of the attorney
representing TJJD in the matter.
(6) Where practicable, TJJD shall maintain
individual collection histories of each account in order to document attempted
contacts with the debtor, the substance of communications with the debtor,
efforts to locate the debtor and his/her assets, and other information
pertinent to collection of the delinquent account.
(7) Prior to referral of the obligation to
the attorney general, TJJD shall:
(A) verify
the debtor's address and telephone number;
(B) transmit no more than two demand letters
to the debtor at the debtor's verified address. The first demand letter shall
be sent no later than 30 days after the obligation becomes delinquent. The
second demand letter shall be sent no sooner than 30 days, but not more than 60
days, after the first demand letter. Where TJJD procedures, statutory mandates,
or the requirements of this section indicate that a lawsuit on the account may
be filed by the attorney general, the demand letters shall so
indicate;
(C) verify that the
obligation is not legally uncollectible or uncollectible as a practical matter,
as follows:
(i) Bankruptcy. TJJD shall
prepare and timely file a proof of claim, when appropriate, in the bankruptcy
case of each debtor, subject to reasonable tolerances adopted by TJJD. Copies
of all such proofs of claims filed shall be sent to the attorney general absent
the granting of a variance. TJJD shall maintain records of notices of
bankruptcy filings, dismissals and discharge orders received from the United
States bankruptcy courts to enable TJJD to ascertain whether the collection of
the claim is subject to the automatic stay provisions of the bankruptcy code or
whether the debt has been discharged. TJJD may seek the assistance of the
attorney general in bankruptcy collection matters where necessary, including
the filing of a notice of appearance and preparation of a proof of
claim.
(ii) Limitations. If the
obligation is subject to an applicable limitations provision that would prevent
suit as a matter of law, the obligation shall not be referred unless
circumstances indicate that limitations have been tolled or are otherwise
inapplicable.
(iii) Corporations.
If a corporation has been dissolved, has been in liquidation under Chapter 7 of
the United States Bankruptcy Code, or has forfeited its corporate privileges or
charter, or, in the case of a foreign corporation had its certificate of
authority revoked, the obligation shall not be referred unless circumstances
indicate that the account is clearly uncollectible.
(iv) Out-of-State Debtors. If the debtor is
an individual and is located out-of-state, or outside the United States, the
matter shall not be referred unless a determination is made that the
domestication of a Texas judgment in the foreign forum would more likely than
not result in collection of the obligation, or that the expenditure of TJJD
funds to retain foreign counsel to domesticate the judgment and proceed with
collection attempts is justified.
(v) Deceased Debtors. If the debtor is
deceased, TJJD shall file a claim in each probate proceeding administering the
decedent's estate. If such probate proceeding has concluded and there are no
remaining assets of the decedent available for distribution, the delinquent
obligation shall be classified as uncollectible and not be referred. In cases
where a probate administration is pending, or where no administration has been
opened, all referred obligations shall include an explanation of any
circumstances indicating that the decedent has assets available to apply toward
satisfaction of the obligation.
(8) Not later than the 90th day after the
date an obligation becomes delinquent, TJJD shall report the uncollected and
delinquent obligation to the attorney general for further collection efforts as
hereinafter provided.
(9)
Reasonable tolerances adopted by the TJJD Finance Division are listed below and
determine when an obligation shall not be referred to the attorney general for
further collection. They are:
(A) amount of
the obligation is less than $500;
(B) existence of any security;
(C) likelihood of collection through passive
means such as the filing of a lien where applicable;
(D) expense to TJJD and to the attorney
general in attempting to collect the obligation;
(E) availability of resources both within
TJJD and within the Office of the Attorney General to devote to the collection
of the obligation; or
(F) debt is
uncollectible as set forth in paragraph (7) of this subsection.
(10) TJJD may utilize the "warrant
hold" procedures of the Comptroller of Public Accounts authorized by the Texas
Government Code, §
403.055, to ensure
that no treasury warrants are issued to debtors until the debt is
paid.
(e) Referral to
Attorneys for Collection.
(1) Suit on the
Obligation by In-House Attorneys.
(A) If TJJD
seeks to use in-house attorneys to collect delinquent obligations through court
proceedings, TJJD must submit a written request to the attorney general's
Bankruptcy and Collections Division.
(B) Upon the written approval of the attorney
general, TJJD may file suit to collect a delinquent obligation through an
attorney serving as a full-time employee of TJJD. Where circumstances make it
impractical to secure attorney general approval for every delinquent obligation
upon which a lawsuit is to be filed, TJJD may apply to the attorney general for
an authorization to bring suit on particular types of obligations through
attorneys employed full-time by TJJD. Such authorization, if given, must be
renewed at the beginning of each fiscal year.
(C) After an obligation is referred to TJJD's
attorneys employed as in-house counsel, the obligation shall be reduced to
judgment against all entities legally responsible for the obligation where the
lawsuit and judgment will make collection of the obligation more likely and the
expenditure of TJJD resources in recovering judgment on the obligation is
justified.
(D) Where authorized by
law, TJJD shall plead for and recover attorney's fees, investigative costs, and
court costs in addition to the obligation.
(E) Every judgment taken on a delinquent
obligation shall be abstracted and recorded by TJJD in every county where the
debtor owns real property, operates an active business, is likely to inherit
real property, owns any mineral interest, or has maintained a residence for
more than one year.
(2)
Referral to the Attorney General.
(A) TJJD
may explore the exchange of accounts with the attorney general by computer tape
or other electronic data transfer and discuss any variances as may be
appropriate. TJJD and the attorney general may agree upon an exchange of
certain minimum account information necessary for collection efforts by the
attorney general.
(B) TJJD may
refer individual accounts to the attorney general after the procedures set
forth in subsection (d)(7)-(10) of this section. Individual accounts referred
to the attorney general shall include the following:
(i) copies of all correspondence between TJJD
and the debtor;
(ii) a log sheet
(see subsection (d)(6) of this section) documenting all attempted contacts with
the debtor and the result of such attempts;
(iii) a record of all payments made by the
debtor and, where practicable, copies of all checks tendered as
payment;
(iv) any information
pertaining to the debtor's residence and his/her assets; and
(v) copies of any permit application,
security, final orders, contracts, grants, or instrument giving rise to the
obligation.
(C)
Delinquent accounts upon which a bond or other security is held shall be
referred to the attorney general no later than 60 days after becoming
delinquent. All such accounts where the principal has filed for relief under
federal bankruptcy laws shall be referred immediately, since collection of the
security may obviate the need to file a claim or to appear in the bankruptcy
case.
(D) The attorney general may
decide that a particular obligation or class of obligations may be assigned
after referral to the appropriate division within the Office of the Attorney
General.
(3) Referral to
Collection Firms or Private Attorneys.
(A)
Prior Approval of Attorney General. Except as provided by §
2107.003, Texas
Government Code, TJJD may not contract with, retain, or employ any person other
than a full-time employee of TJJD to collect a delinquent obligation without
prior written approval of the attorney general. Any existing arrangements must
receive the written approval of the attorney general to be renewed or extended
in any fashion.
(i) Approval of Contract with
Private Firm or Attorney.
Prior to contracting with, retaining, or employing a person other than a full-time employee of TJJD to collect a delinquent obligation, TJJD must submit a proposal to the attorney general requesting the attorney general to collect the obligation(s).
(ii) TJJD must submit the proposed contract
to the attorney general for written approval. The proposal must disclose any
fee that TJJD proposes to pay the private collection firm or attorney. The
attorney general may elect to undertake representation of TJJD on the same or
similar terms as contained in the proposed contract. If the attorney general
declines or is unable to perform the services requested, the attorney general
may approve the contract. If the attorney general decides that TJJD has not
complied with this subsection, the attorney general may:
(I) decline to approve the contract;
or
(II) require TJJD to submit or
resubmit a proposal to the attorney general for collection of the obligation in
accordance with this subsection.
(iii) If the attorney general fails to act as
set forth in clause (i) of this subparagraph within 60 days of receipt of the
proposed contract or receipt of additional information requested, the attorney
general is deemed to have approved the contract in accordance with this
rule.
(B) Requirements
of Proposed Contracts with Private Persons Presented for Attorney General's
Approval. In addition to information required by other state laws, all
contracts for collection of delinquent obligations must contain or be supported
by a proposal containing the following:
(i) a
description of the obligations to be collected sufficient to enable the
attorney general to determine what measures are necessary to attempt to collect
the obligation(s);
(ii) explicit
terms of the basis of any fee or payment for the collection of the
obligation(s);
(iii) a description
of the individual accounts to be collected in the following respects:
(I) the total number of delinquent
accounts;
(II) the dollar
range;
(III) the total dollar
amount;
(IV) a summary of the
collection efforts previously made by TJJD; and
(V) the legal basis of the delinquent
obligations to be collected.
(C) Additional Requirements of Proposed
Contracts with Private Persons Presented for Attorney General Approval. All
contracts for collection of delinquent obligations shall contain provisions
stating the following:
(i) Litigation on the
delinquent account is prohibited unless the private person obtains specific
written authorization from TJJD and the attorney general and complies with the
requirements of this rule;
(ii) The
person shall place any funds collected in an interest bearing account with
amounts collected, plus interest, less collections costs, payable to TJJD on a
monthly basis or by direct deposit to TJJD's account on a weekly basis with
TJJD billing once a month; in either case a listing of the accounts and amounts
collected per account shall be submitted to TJJD upon deposit of the
funds;
(iii) The person shall refer
any bankruptcy notice to TJJD within three working days of receipt;
(iv) TJJD may recall any account without
charge;
(v) The person may not
settle or compromise the account for less than the full amount owed (including
collection costs where authorized by statute or terms of the obligation)
without written authority from TJJD;
(vi) The person is not an agent of TJJD but
is an independent contractor, and the person will indemnify TJJD for any loss
incurred by his/her violation of state and federal debt collection statutes or
by the negligence of the person, his/her employees, or his/her agents;
and
(vii) Any dispute arising under
the contract shall be submitted to a court of competent jurisdiction in Texas,
unless any other venue is statutorily mandated, in which case the specific
venue statute will apply, subject to any alternative dispute resolution
procedures adopted by TJJD pursuant to Chapter 2009, Texas Government
Code.
Notes
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