An attorney based collection agency out of California is threatening to sue over a $1300 unpaid debt in Texas. The attorney is taking a contingency of 25% from the company to collect the debt if there is no suit; if there is a suit, he will ask them for more money since it crosses state lines. In Texas, a collection agency or attorney who collects debts on a consistent basis cannot sue in small claims courts. Also, you must be bonded in Texas to collect debts and he is not. Question, is there any way for this California agency to get around the small claims courts (small claims courts in Texas handle up to $10,000 in debt limits) and take it to a different type of court to sue and collect the debt in Texas?

How do you know what the fee agreement is?

And what is your role in this? Are you the debtor or the California attorney? Reason I am asking: if you are the collector, I want a cut. If you are the debtor, maybe, why do you want to know?

No, I am the debtor. I looked up the California attorney (who says he's in house for this collection agency) to see what he an his attorney based collection agency charged a company for pursuing a debt to see how much everyone would be gaining from this pursuit and a lawsuit. They lay out their percentages online on their web page. I wanted to know, of course, how likely they were to sue since if it's $1300 and they get the percentages outlined in my question and the company has to pay still more to them if they don't collect but litigate because it cross state line, according to their web page where they solicit clients, and it's all out of $1300 that does not leave much to recover for the company and not a lot for the lawyer and his collection agency. The original debt was $2100, half of which was paid to the company some months back. Then I ran into a problem and could not pay the remainder and it was sent to this attorney based collection agency in California. (I live on a social security check of $680 a month which is precious little.) The reason I wanted to know was to get an idea of the likely hood of them suing and how they might possibly try to get around the small claims court since that is prohibited in Texas as outlined in my question. Thank you for your input and sorry there is no cut for you.

I live on a social security check of $680 a month which is precious little.Hello Tex:

If that's all you got, then let them win... They can't COLLECT, and who cares about a ding on your credit report? It doesn't sound like you'll be buying a new house anytime soon.

excon

... and sorry there is no cut for you. I really didn't expect any, just didn't want to be doing a collection agency any favors. ;)

If he is not licensed to practice law in Texas, he wouldn't be regarded as an attorney there, and thus could avoid the attorney-in-small claims prohibiition. It would still be a problem, as you mention, because of the Texas collection agency regulations.

One workaround would be to waive small claims rules, and find a Texas attorney to partner with (pro haec vice, it's called). Either that, or simply sue you in California (or any state where you have substantial contacts). Either way, it doesn't seem like much of a profit margin unless they can find some way to tack on attorney fees.