House Bill No. 4238 aims to amend the Finance Code by adding a new section that addresses the collection of consumer debt incurred as a result of identity theft. The bill defines "identity theft" and outlines the conditions under which creditors, debt collectors, or third-party debt collectors are prohibited from attempting to collect debts from consumers who have been victims of identity theft. Specifically, if a consumer provides evidence such as a criminal complaint, a court order, or a Federal Trade Commission identity theft report, the debt collector must cease collection efforts and notify relevant parties that the debt is disputed and not collectible from the victim.

Additionally, the bill stipulates that debt collectors may not sell or transfer the disputed debt, except to pursue the alleged perpetrator of the identity theft. If a debt collector believes that a consumer has falsely claimed to be a victim of identity theft, they may file a lawsuit to collect the debt, but they must prove that the consumer is not a victim. The bill is set to take effect on September 1, 2025.

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