What is “Hindering a Secured Creditor?”

What is “Hindering a Secured Creditor” and can a debt collector make such threats?

Too often, debt collectors cross the line in their attempts to collect past due bills. Certainly a creditor is entitled to be paid the money it is owed, but there are limits to what a debt collector can do to collect. A debt collector may not threaten to do what it legally cannot do. For example, to file suit when the statute of limitations has expired.

A debt collector may not threaten criminal charges as a means to collect a debt. It is not a crime to fail to pay a debt. Threatening to file criminal charges is a violation of debt collection laws. Making such threats are solely a means of intimidation, to instill fear, and to induce you to believe you must pay or go to jail. Do not be intimidated. This is the United States – there are no debtor prisons.

Threatening criminal consequences happens frequently in auto debt collections. Finance companies seeking to collect past due amounts or to locate the car for repossession, threaten debtors that failure to turn over the car constitutes hindering a secured creditor. So, just what is hindering a secured creditor? What are the chances such charges can really be filed against you?

Texas Penal Code 32.33  contains the Hindering Secured Creditors crime. A person who has signed a security agreement creating a security interest in collateral, such as a car, may be convicted of hindering a secured creditor if , with intent to hinder enforcement of the security interest, he destroys, removes, conceals, encumbers, or otherwise harms or reduces the value of the property.

First, though, the creditor must have made a demand for the collateral to be returned. Also, the statute says the property was taken outside Texas or across Texas lines without the consent of the secured party (finance company). Intent to hinder prosecution of the security interest must be proven as an element of the alleged crime.

For a person to be convicted of the crime of “Hindering Secured Creditors,” the accusing party must prove the person INTENDED to hinder enforcement by undertaking a specific act of “hindering.”

Merely refusing to turn over property will not support a conviction because that alone does not show active concealment, destruction, harming or removing the property from the reach of the secured creditor.

Although not impossible, such charges are rarely filed in Dallas County, Collin or Tarrant County or other large counties. And even though it is rare for such charges to be filed at all, the risk is somewhat greater in smaller, rural counties. Proving the charges is a high and difficult burden.

Disclaimer: I am not a criminal defense lawyer but I handled a case for abuse of process against a financial institution in a county nearby. I spoke to prosecutors and researched the law while handling the case which resulted in a substantial settlement for my clients who had been arrested on such a charge.

If you are being threatened to be arrested by a debt collector in Dallas County or nearby, be aware that the mere making of the threat is a violation of debt collection laws and may support a case against the debt collector for such threats.

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