If someone opened an account in your name and you get a Texas court order declaring you an identity-theft victim, collectors who receive it must stop collecting that debt from you and correct what they reported.
Added Finance Code § 392.308. A creditor, debt collector, or third-party debt collector that receives a court order under Business & Commerce Code § 521.103 (or a similar law) declaring the consumer an identity-theft victim may not try to collect the debt resulting from the theft; within seven business days it must stop collecting, must notify everyone it previously reported the debt to that the debt is disputed and not collectible from the victim, and may not sell the debt except to pursue the thief. Home loans and already-obtained judgments are excluded.
- Citation
- Tex. H.B. 4238, 89th Leg., R.S. (2025), Acts 2025, ch. 453; Tex. Fin. Code § 392.308
- Court or agency
- Texas Legislature
- Date
- September 1, 2025
- Law
- TDCA, Texas law
Summary
H.B. 4238 was signed June 20, 2025, and took effect September 1, 2025. It adds identity-theft protections to the Texas Debt Collection Act. The protection is triggered by a court order declaring the consumer a victim, not by a simple dispute letter, and it does not reach home loans or debts already reduced to judgment.
Background
Identity theft creates a particular kind of debt problem. The victim never agreed to the account, but the account still gets charged off, sold, reported to credit bureaus, and sometimes sued on. Texas has long allowed an identity-theft victim to ask a court for an order declaring that he or she is a victim, under Business & Commerce Code § 521.103. Until 2025, though, the Texas Debt Collection Act did not say what a creditor or collector had to do after receiving one.
What changed
H.B. 4238 added § 392.308 to the Finance Code, effective September 1, 2025.
- Trigger. The protections apply when a creditor, debt collector, or third-party debt collector receives from the consumer a court order under § 521.103, or a substantially similar federal or out-of-state law, declaring the consumer a victim of identity theft.
- No collection. After receiving the order, the creditor or collector may not attempt to collect the debt, or the part of the debt, that resulted from the identity theft described in the order.
- Seven business days. Within seven business days it must stop efforts to collect the disputed debt from the victim and must notify each person who previously received a report about the debt from it that the debt is disputed and not collectible from the victim.
- No resale. It may not sell or transfer the debt for value, except to collect from the alleged thief or another responsible person who is not the victim.
- Secured debts. If the debt is secured by personal property, the creditor may still enforce its security interest under the UCC but may not seek a deficiency from the victim.
- Pursuing the thief. The creditor or collector may sue the alleged perpetrator.
- Exclusions. The section does not apply to home loans as defined in Finance Code chapter 343 or to collection of a judgment already obtained.
Our take
This is a meaningful addition to the Texas Debt Collection Act, and it fits naturally with the Act’s civil remedies. Its main limitation is the trigger. A dispute letter or a police report alone does not start the seven-day clock under this section; a court order does. That makes the section most useful to people who already know an account is fraudulent and take the step of obtaining a § 521.103 declaration.
The exclusion for judgments is also important. Once a collector has a judgment on an identity-theft account, this section does not stop collection of that judgment. Other remedies may still exist, but they are harder.
What it means if you’re sued in Texas
If you are sued on an account you never opened, file an answer and deny the debt. Identity theft is a defense to the lawsuit itself, and you should not let the case go to default while you sort out the paperwork. Ask about a court declaration under § 521.103 and send it to every creditor and collector involved. A free case review is available if you are being pursued for a debt that is not yours.
Takeaway
If you are being pursued for an account you never opened, a court declaration of identity theft under Business & Commerce Code § 521.103 is now a powerful tool, and it works best before a collection judgment is entered.
Sources
Primary authority
- H.B. 4238 enrolled bill text (Texas Legislature Online)
- H.B. 4238 bill history (Texas Legislature Online)
- Texas Finance Code chapter 392, including § 392.308 (Texas Constitution and Statutes)
Secondary sources
This summary and analysis are general information, not legal advice. Later decisions, amendments or agency actions may change the law; check the current status before relying on it.