I have an attorney for a collection agency calling me and threatening to garnish my wages, can they do this

There is a 4 year statute of limitations in Texas in which a plaintiff has the ability to bring a lawsuit based on breach of contract. The question in your case will depend on when exactly you were considered in breach of the contract. There is not a universally accepted event which you can rely upon to know when the time period begins to run, but most courts consider the date to be 30 days following the date of last payment. Some other courts consider it to be the date on which the finance company sends you the notices regarding the repossession. It is important to remember that the 4 year statute of limitations is a procedural bar preventing the ability to file a lawsuit. It does not mean that the debt no longer exists, or that the creditor no longer has a right to the money. Many companies will cease collection activity once the statute of limitations bars the right to file suit on the debt, but they do not necessarily have to cease all collection activity.

However, if the statute of limitations has run, and the collection agency is threatening a lawsuit, then that can be a violation of the federal Fair Debt Collection Practices Act and the Texas Debt Collection Act. Further, a creditor (except in certain situations such as child support and taxes) cannot garnish your "current wages". The best way to think of "current wages" is that this is the traditional version of wage garnishment where a creditor can go to your employer and require them to send a certain portion of your paycheck to them to satisfy the debt. While this practice is not allowed for most creditors in Texas, your wages lose their exempt status once they are under your control. So, once you cash your paycheck or deposit into a bank account, it is no longer exempt. The creditor can then file suit against your bank to garnish the funds kept in your bank account. This is a fairly complicated and pricey process, and is beyond the scope of this answer, but be aware that it is an available remedy your creditor may choose to employ if they somehow obtain a judgment.

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