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Anatomy Of The Collections Process:  An Overview With Efficiency Tips From A Seasoned Collections Lawyer

1. Small Claims Courts.  

Suit to collect a debt must be brought in the county and precinct in which the defendant resides.  An exception to the general rule is when the action is on an obligation that the defendant has contracted to perform in a certain county, in which event it may be brought in that county.  Tex.Gov’t.Code Ann. §28.011 (Vernon 1988).  (See Caution note at page 2 if it is a consumer transaction).  Therefore, if the creditor is pursuing its claim in justice court it is useful to have a contract (or credit application) that provides that the creditor be paid in the county where it is located.  Otherwise you may be required to file suit in the county and precinct where the defendant resides.  The constable’s office will probably be helpful in confirming whether a particular address is in their precinct.

2. Justice Courts.  

Justice Courts have yet another set of venue provisions.  Civ.Prac. & Rem. Code §15.081, et.seq. (Vernon 1986).  Again, the general rule provides for suit in the county and precinct where the defendant resides.  A written contract promising performance at a particular place (i.e. a credit application providing for payment at a certain place) may be brought in the county and precinct in which the contract was to be performed.  However, suit on a contract involving consumer matters may be brought only in the county and precinct in which the contract was signed or in which the defendant resides.  A suit against a corporation may also be brought in the county and precinct in which all or part of the cause of action arose or where the corporation has an agency or principal office.  It may be argued that the agreement to pay the creditor in the creditor’s county and failure to do so is all or part of the cause of action.

3. County Courts, County Courts-at-law and District Courts.  

The general venue rules for these courts are found in Section 15.001, et.seq. of the Civil Practices & Remedies Code.  Suits on accounts can be brought pursuant to the general rule.

(a)

in the county in which all or a substantial part of the events or omissions giving rise to the claim occurred;

(b)

in the county of defendant’s residence at the time the cause of action accrued if defendant is a natural person;

(c)

in the county of the defendant’s principal office in this state, if the defendant is not a natural person; or

(d)

if the Subdivisions (1), (2), and (3) do not apply, in the county in which the plaintiff

resided at the time of the accrual of the cause of action.

Civ.Prac.&Rem. Code §15.002 (Vernon Supp. 1998).

For contracts in writing, suit may be brought in the county where the obligation is to be performed if expressed in the writing, or where the defendant resides.  Here again, a credit application specifically requiring the debtor to make payment at a particular place, i.e. at the plaintiff’s office, would allow suit in the county where the plaintiff does business. If it is a consumer debt, the action must be brought either in the county in which the defendant signed the contract or in the county where the defendant resides at the time the suit is filed.  (See Caution note at page 2, if it is a consumer transaction).  

XII. Service of Process.

Tip:The creditor’s attorney is responsible for insuring that the citation is correctly issued, served and return made.  Review the citation before it is forwarded for service, work closely with the process server to accomplish proper service and check the citation return before it is filed.

Citations may be served by the Constable, Sheriff or private process server.  As a general rule, service on a corporate defendant is accomplished by delivery of the citation to its registered agent, at the registered office, or to its president or vice president. Tex.Bus.Corp. Act Art. 2.11 (Vernon 1980).  The current registered agent and office information can be obtained by calling the  Texas  Secretary  of  State  at (512) 463-5555 or by accessing SOSDirect at http://www.sos.state.tx.us/corp/sosda/index.shtml.  General partnerships are served by delivery of citation to any partner, but each partner to be held individually liable must also be served.  Civ.Prac.&Rem. Code, §17.022 (Vernon 1997).  Limited partnerships are served by delivery of citation to any general partner or to the registered agent of the limited partnership.  Tex.Rev.Civ.Stat.Ann., Art. 6132a-1 (Vernon Supp. 1998).  The Business Organization Code, effective January 1, 2006, contains similar provisions and applies to entities formed on or after January 1, 2006, and to prior entities electing to be governed by the Code.

When the defendant avoids service of process, substitute service may become necessary.  For individuals, on motion supported by affidavit (reflecting attempts to serve the defendant), substitute

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