Create a Basic Needs Exemption from Debt Collection (2021 Legislative Priority)

Texas has a long history of protecting wages from debt collection in the state constitution. This protection is essential, but current laws are antiquated. They protect current wages, but once wages are deposited in an account, protections often no longer apply. When debt collectors freeze accounts to collect an old debt, many Texans face a financial crisis: cascading defaults on housing, bills, and other debts, and no funds to pay for food or basic necessities.

Prior to the pandemic, debt collection lawsuits were growing at a brisk pace—a 162% increase in justice court debt collection filings, a 107% increase in debt collection cases filed in county court and a 55% increase in cases in district court from 2014 to 2019—leading to a total of 424,336 debt claim filed in fiscal year 2019.

The pandemic and its financial impacts on Texans have raised the urgency to modernize our wage garnishment protections to include a basic needs exemption. By protecting a basic amount of funds deposited into a bank account, Texans will be able to pay debts they owe, while maintaining current financial obligations and building for the future.

Fair Financial Services & the 87th Legislative Session

Texas Appleseed has four 2021 legislative policy initiatives as part of our Fair Financial Services Project; they include advocacy surrounding Debt Collection, Coerced Debt, Payday & Auto Title Lending, and Auto Insurance Pricing. All priorities can be found on our legislative page. These priorities focus on policies that enhance the ability of Texas families to recover and rebuild from the economic harms of the pandemic. The U.S. Census and other survey data show that 40 to 50% of Texans continue to experience increased economic hardship due to the pandemic.

Before the pandemic hit, when unemployment was low, Texans were already experiencing record indebtedness, record debt collection lawsuit filings, and high fees and auto repossessions related to payday and auto title loans. The pandemic has deepened the financial harms that Texans are experiencing from these trends in our economy. Black and Latino Texans are particularly struggling under the weight of these dynamics that undermine financial wellbeing.

Building on our ongoing systemic reform efforts, these priorities will make a meaningful financial difference for Texans harmed by the pandemic, and will help Texans families to rebuild in its wake.