Current through Reg. 49, No. 38; September 20, 2024
(a) When an
obligation has been determined to be delinquent, pursuant to §
353.121 of this title (relating to
Procedures For Establishing A Delinquent Obligation), the board shall take the
following steps.
(1) Verify the debtor's
address and telephone number, to the extent possible.
(2) Use the comptroller of public account's
"Warrant Hold" procedures to prevent payment to a delinquent debtor.
(3) Within 30 days of the obligation being
determined to be delinquent, send the debtor a demand letter for the full
amount of the obligation.
(4) If
the debtor does not respond to the demand letter, send a second demand letter
no sooner than 30 days but not more than 60 days after the first demand letter
was mailed.
(5) Verify that the
obligation is not legally uncollectible or uncollectible as a practical matter.
(A) In cases of bankruptcy, the board shall
prepare and timely file a proof of claim, when appropriate, in the bankruptcy
case of each debtor. Copies of all such proofs of claims filed shall be sent to
the attorney general. The board shall maintain records of notices of bankruptcy
filings, dismissals, and discharge orders to enable it to ascertain whether the
collection of the claim is subject to automatic stay provisions or whether the
debt has been discharged.
(B) If
the obligation is subject to an applicable limitation provision that would
prevent suit as a matter of law, the obligation will not be referred to the
attorney general unless circumstances indicate the limitations provision has
been tolled or is otherwise inapplicable.
(C) If a corporation has been dissolved, has
been liquidated under Chapter 7 of the United States Bankruptcy Code, or has
forfeited its corporate privileges or charter, or, in the case of a foreign
corporation, had its certificate of authority revoked, the obligation shall be
referred to the attorney general unless circumstances indicate the account is
clearly uncollectible. These circumstances shall be documented in the
appropriate account file.
(D) If
the debtor is an individual and is located out-of-state, or outside the United
States, the matter shall not be referred to the attorney general unless a
determination is made that the domestication of a Texas judgment in the foreign
forum would more likely than not result in collection of the obligation, or
that the expenditure of board funds to retain foreign counsel to domesticate
the judgment and proceed with collection attempts is justified. The board shall
consult with the attorney general in making such determinations.
(E) If the debtor is deceased, the board
shall file a claim in each probate proceeding administering the decedent's
estate. If such probate proceeding has concluded and there are no remaining
assets of the decedent available for distribution, the delinquent obligation
shall be classified as uncollectible and not referred to the attorney general.
If probate administration is pending or if none has been opened, any referral
to the attorney general shall include an explanation of any circumstances
indicating that the decedent has assets available to apply towards satisfying
the obligation.
(6) If
the debtor does not respond to the second demand letter within 30 days of it
being mailed, and if the debt is not determined to be legally uncollectible or
uncollectible as a practical matter, the board shall report the uncollected and
delinquent obligation to the attorney general for further collection efforts.
However, delinquent obligations upon which a bond or other security is held
shall be referred to the attorney general no later than 60 days after becoming
delinquent. If the principal has filed for relief under federal bankruptcy
laws, the account shall be referred to the attorney general immediately upon
notice or as soon as the board knows of the filing.
(b) Demand letters sent by the board shall
include a statement, where practical, that the debt, if not paid, will be
referred to the Texas attorney general's office. The demand letters shall be
mailed in envelopes bearing the notation "address correction requested" in
conformity with the current regulations and policies of the United States
Postal Service. If an address correction is provided by the United States
Postal Service, the affected demand letter shall be resent to the address
provided.
(c) Where permitted by
state law, the board shall file a lien securing an obligation in the
appropriate records of the county where the debtor's principal place of
business or, where appropriate, the debtor's residence is located or in such
county as may be required by law. The lien shall be filed as soon as the
obligation becomes delinquent or as soon as is practicable. If the delinquent
obligation is referred to the attorney general in accordance with this section,
the lien may not be released unless the board receives written approval from
the attorney general or if the delinquent obligation is paid in full.
(d) Where practicable, the board shall
maintain individual collection histories of each account in order to document
attempted contacts with the debtor, the substance of the communications with
the debtor, efforts to locate the debtor and assets, and other information
pertinent to collection of the delinquent account.
(e) The procedures of this section do not
apply to:
(1) bonds or other debt obligations
held by the board as evidence of debt incurred through the board's financial
assistance programs for which collection remedies are provided by the debt
vehicle or by law; or
(2) any debt
for which a collection process is already determined by law.
