| (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.
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| Source Note: The provisions of this §353.122 adopted to be effective January 6, 2004, 29 TexReg 214; amended to be effective March 20, 2007, 31 TexReg 1581; amended to be effective April 26, 2023, 48 TexReg 2134 |
