H.B. No. 4238 introduces new provisions to the Texas Finance Code regarding the collection of consumer debt incurred due to identity theft. The bill adds Section 392.308, which defines "identity theft" and outlines the responsibilities of creditors, debt collectors, and third-party debt collectors when they receive a court order declaring a consumer as a victim of identity theft. Specifically, these entities are prohibited from attempting to collect debts resulting from identity theft as defined by the court order. Additionally, they must cease collection efforts within seven business days of receiving notice of the disputed debt and inform all parties previously notified about the debt that it is now disputed and not collectible from the victim.

The bill also stipulates that creditors and debt collectors may not sell or transfer the disputed debt, except to pursue collection from the actual perpetrator of the identity theft. They retain the right to enforce security interests if the debt is secured by tangible personal property but cannot seek any deficiency from the victim. This legislation aims to protect consumers from the repercussions of identity theft and ensure that they are not held liable for debts incurred fraudulently. The act is set to take effect on September 1, 2025.

Statutes affected:
Introduced: ()
House Committee Report: ()
Engrossed: ()
Senate Committee Report: ()
Enrolled: ()