Midland Funding Is Suing Me in Texas — Here's What the Law Actually Says

When you hear "Midland" in a Texas debt collection context, it almost always refers to two legally distinct but related entities. Midland Funding LLC is the legal holder of the purchased debt portfolios — the entity named as plaintiff in most Texas collection lawsuits. Midland Credit Management Inc. (MCM) is the servicer that handles day-to-day collection operations, account recordkeeping, and litigation support. Both are wholly owned subsidiaries of Encore Capital Group, Inc. (NASDAQ: ECPG), one of the two largest publicly traded debt buyers in the United States, headquartered in San Diego, California.

The entity split matters enormously in Texas. Midland Funding owns the legal claim. MCM provides the witness who authenticates the underlying account records in court. The foundational problem that runs through all Texas debt-defense doctrine is simple: that MCM witness worked for MCM, not for Citibank or Chase or Capital One — the bank that actually created and maintained the records Midland is relying on.

Encore Capital acquires portfolios of charged-off consumer debt — primarily credit cards from major issuers — at deep discounts, typically pennies on the dollar. PRA's business model, like all large debt buyers, depends on default judgments. When defendants do not respond, the court enters judgment for the full claimed balance. When defendants fight back with properly documented defenses, Midland must produce documentation it often cannot locate or authenticate.

Texas is distinctive among all states in this network for one reason: the Texas Attorney General took enforcement action directly against Midland Funding LLC, Midland Credit Management Inc., and Encore Capital Group in 2011 — a state-law enforcement action targeting the same robo-signed affidavit practice that Texas courts have been skeptical of ever since. That state record, combined with two federal CFPB enforcement actions, creates a documented regulatory backdrop for Texas defendants that no other state matches at the state-law level.

Important scope note: Texas did not participate in the 2018 multistate attorney general settlement involving 42 states plus the District of Columbia that produced additional Encore penalties. Texas's enforcement history with Midland is its own, earlier, and Texas-specific track.

On July 8, 2011, the Texas Attorney General's Consumer Protection Division — under then-Attorney General Greg Abbott — filed an enforcement action in Harris County District Court against Midland Funding LLC, Midland Credit Management Inc., and Encore Capital Group, Inc.

The action targeted a specific practice: Midland was filing affidavits in Texas collection lawsuits at high volume without proper verification of the underlying account information. These "robo-signed" affidavits attested to the accuracy of account balances and chain-of-title information without the affiants having actually reviewed the underlying records. The Texas AG determined this practice violated state consumer protection law.

The case resolved approximately six months after filing by Agreed Final Judgment and Assurance of Voluntary Compliance. The settlement required Midland to pay $500,000 and to reform its affidavit production practices and account-documentation procedures. Texas consumers with judgments affected by defective affidavits received relief in the form of discounts on questionable judgments.

Why this still matters when Midland sues you in Texas in 2026. The 2011 settlement is public record establishing that Midland's documented practice of filing inadequate affidavits was specifically the subject of Texas state-law enforcement. When Midland's MCM custodian signs an affidavit in your case asserting account accuracy and chain of title, the 2011 consent judgment — and its finding that Midland was doing exactly this without adequate verification — is part of the legal and factual context.

Texas did not participate in the 2018 multistate Encore settlement involving 42 other states plus the District of Columbia, which generated additional penalties. The 2011 Texas AG action is Texas's own enforcement track — filed earlier, settled independently, and Texas-specific in its findings. No other state in the Answered network has a state AG enforcement action specifically against Midland Funding at this level of detail.

The federal Consumer Financial Protection Bureau has taken two major enforcement actions against Encore Capital Group, the parent of Midland Funding and MCM.

The first consent order, entered September 9, 2015, required Encore to pay $52 million total: $42 million in consumer refunds, a $10 million civil money penalty, and an agreement to halt collection on more than $125 million worth of debt that Encore could not adequately document. The 5-year consent order found that Encore's subsidiaries collected on debts they knew or should have known to be inaccurate, filed collection lawsuits using false affidavits, and pursued consumers without the documentation required to prove they owned the debt and that the amounts were accurate. The 2015 consent order specifically required Encore's subsidiaries to obtain the original cardholder agreement and account-level transfer documentation before filing suit. The CFPB press release documenting these findings is available at consumerfinance.gov/about-us/newsroom/cfpb-takes-action-against-the-two-largest-debt-buyers-for-using-deceptive-tactics-to-collect-bad-debts/.

The second consent order, entered October 16, 2020, required Encore to pay $15 million in civil penalties and $79,308.81 in consumer redress. The 2020 order found that Encore had violated the terms of the 2015 order — continuing to sue consumers without the documentation the 2015 order required, and sending approximately 425,000 collection letters that were missing the required disclosure when a debt was potentially time-barred. The 2020 order extended the 2015 conduct provisions for an additional five years. The CFPB press release is available at consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-settles-lawsuit-debt-collectors-and-debt-buyers-encore-capital-group-midland-funding-midland-credit-management-and-asset-acceptance-capital-corp/. The CFPB enforcement actions landing page for Encore is at consumerfinance.gov/enforcement/actions/encore/.

Together these two federal actions produced over $67 million in regulatory consequences against Encore for exactly the kinds of conduct — filing without adequate documentation, suing on time-barred debts without disclosure, using affidavits that couldn't withstand scrutiny — that Texas courts have been examining under Tex. R. Evid. 803(6) for years. The federal enforcement record applies nationwide, including in every Texas county and appellate district.

Texas is divided into 14 courts of appeals, each covering specific counties. On the foundational evidence question — what Midland's witness must establish to admit the original creditor's account records under Tex. R. Evid. 803(6) — different Texas appellate courts have given different answers. This is a real and operative doctrinal split, and any Texas blog post or legal guide that treats Texas doctrine as uniform is misleading you.

The defense-favorable approach comes from the El Paso (8th District) and Dallas (5th District) courts.

In Martinez v. Midland Credit Management, Inc., 250 S.W.3d 481 (Tex. App.—El Paso 2008, no pet.), Midland had obtained summary judgment against the defendant using an affidavit signed only as "E. Mart" with no printed name or title. The El Paso Court of Appeals reversed Midland's summary judgment and remanded the case for further proceedings — the appellate court did not enter judgment for the defendant; it sent the case back to the trial court because Midland's affidavit failed the personal-knowledge requirements of Tex. R. Evid. 803(6). The affiants were MCM employees. They could testify about MCM's records. They could not testify about how the original creditor — Citibank, Chase, Capital One, or another bank — created and maintained the records that predated MCM's acquisition. That personal knowledge of the original creditor's record-keeping, the El Paso court held, is required.

In Riddle v. Unifund CCR Partners, 298 S.W.3d 780 (Tex. App.—El Paso 2009, no pet.), the same El Paso court reversed a $12,119.03 judgment Unifund had obtained. Unifund's witness, Joseph Lutz, had personal knowledge of Unifund's records but no personal knowledge of how First USA Bank — the original creditor — created or maintained the records Unifund was relying on. The judgment was reversed.

In Powell v. Vavro, McDonald & Assocs., L.L.C., 136 S.W.3d 762 (Tex. App.—Dallas 2004, no pet.), the Dallas Court of Appeals applied the same general principle: the foundation witness must have personal knowledge of the records sufficient to satisfy Tex. R. Evid. 803(6).

The creditor-favorable approach comes from Houston's First District court. In Simien v. Unifund CCR Partners, 321 S.W.3d 235 (Tex. App.—Houston [1st Dist.] 2010, no pet.), the First District accepted the "rule of incorporation" approach: records are admissible if (1) they were incorporated and kept in the course of the testifying witness's business, (2) it is the regular practice of that business to rely on the accuracy of those records, and (3) the circumstances otherwise establish trustworthiness. Under Simien, an MCM custodian who can testify that MCM incorporated the original creditor's records into MCM's own systems and regularly relies on them may satisfy the foundation requirement — without needing personal knowledge of how the original creditor maintained the records.

All other Texas appellate courts — the 2nd (Fort Worth), 3rd (Austin), 4th (San Antonio), 6th (Texarkana), 7th (Amarillo), 9th (Beaumont), 10th (Waco), 11th (Eastland), 12th (Tyler), 13th (Corpus Christi), and 14th (Houston) — have not consistently aligned with either line. In these districts, the outcome often depends on the specific facts, the quality of the witness's testimony, and which line of authority the trial judge finds more persuasive.

The following lists the major Texas counties and the Court of Appeals that covers them. Use this to determine whether your case is in a defense-favorable, creditor-favorable, or variable district.

5th District (Dallas) — DEFENSE-FAVORABLE under Powell v. Vavro doctrine: Dallas, Collin, Rockwall, Kaufman, Grayson, Hunt, and several surrounding counties.

8th District (El Paso) — DEFENSE-FAVORABLE under Martinez and Riddle doctrine: El Paso, Hudspeth, Brewster, Presidio, Jeff Davis, Reeves, and surrounding West Texas counties.

1st District (Houston) — CREDITOR-FAVORABLE under Simien rule-of-incorporation approach: Harris, Galveston, Brazoria, Fort Bend, Chambers, Austin, Colorado, Grimes, Waller, and Washington counties.

14th District (Houston) — also covers Harris County and surrounding counties (the 1st and 14th Districts share a geographic footprint and rotate cases between them). First District precedent, including Simien, is frequently persuasive in 14th District cases.

2nd District (Fort Worth) — Tarrant, Denton, Wise, Parker, Hood, Johnson, Wichita, Archer, and surrounding North Texas counties. Variable — no strong alignment with either line.

3rd District (Austin) — Travis, Williamson, Hays, Bell, McLennan, and surrounding Central Texas counties. Variable.

4th District (San Antonio) — Bexar, Comal, Guadalupe, Wilson, and many South Texas counties. Variable.

For all other Texas counties — including those in the 6th (Texarkana), 7th (Amarillo), 9th (Beaumont), 10th (Waco), 11th (Eastland), 12th (Tyler), and 13th (Corpus Christi) districts — the foundational doctrine is variable. The Texas Judicial Branch website at txcourts.gov has a court locator that identifies the court of appeals covering any Texas county. Search your county name to confirm your district before relying on case-law-based defenses.

The business records exception to the hearsay rule under Texas Rule of Evidence 803(6) allows a party to introduce records without the original author testifying — provided four requirements are met. The records must have been (1) made and kept in the course of a regularly conducted business activity; (2) made as a regular practice of that business; (3) made at or near the time of the recorded event; and (4) made by a person with knowledge acting in the regular course of business.

These requirements can be established through live testimony from the foundation witness or, under Tex. R. Evid. 902(10), through a self-authenticating written certification signed by a qualified custodian. Most Midland cases use a Rule 902(10) affidavit rather than live testimony — and the same personal-knowledge requirement applies to that affidavit.

The doctrinal split is entirely about requirement (4): the "person with knowledge" who can testify or certify under Rule 902(10) about the record-keeping practices. Midland's witness is an MCM employee. That employee has personal knowledge of how MCM keeps and processes records. The underlying account records — the original credit card statements, the charge history, the cardholder agreement — were created and maintained by Citibank, Chase, Capital One, or another original creditor. The MCM witness generally has no personal knowledge of how that bank's record-keeping worked.

Under the El Paso and Dallas approach, that gap is fatal. The foundation witness must have personal knowledge of how the ORIGINAL CREDITOR created and maintained the records being offered, not merely how the debt buyer incorporated them after purchase. An MCM custodian cannot satisfy that requirement for records created by a bank where they never worked.

Under the Houston First District approach, that gap can be bridged by showing that MCM incorporated the original creditor's records into MCM's own systems, regularly relies on them for collection decisions, and that the circumstances establish trustworthiness. The MCM witness's knowledge of MCM's practices — combined with evidence of MCM's reliance on those records — may be sufficient.

Practical implication: at trial or at a summary judgment hearing, challenge Midland's custodian witness on their personal knowledge of how the original creditor maintained its records. In El Paso and Dallas districts, this challenge carries the weight of binding appellate authority. In other districts, it is still a meaningful argument drawn from persuasive Texas appellate authority that the trial judge may find compelling.

Two bodies of law give Texas defendants statewide procedural protections that apply regardless of which appellate district covers their county.

The Texas Debt Collection Act (TDCA), codified at Texas Finance Code Chapter 392, prohibits a broad range of unfair, deceptive, and harassing debt collection practices. The TDCA provides a private right of action for consumers, with remedies including actual damages, statutory damages, and attorney's fees. The most significant TDCA provision for Texas Midland defendants is Tex. Fin. Code § 392.307(d), which imposes the strongest debt-buyer no-revival rule in the country: when the plaintiff is a debt buyer — not the original creditor — no payment, partial payment, promise to pay, or other activity can restart the statute of limitations clock once it has run. This rule eliminates an entire category of tactics that debt buyers use in most states to re-open time-barred claims.

Tex. R. Civ. P. 508.2 governs debt-claim petitions filed in Texas Justice Court — the venue where most Midland lawsuits land because most consumer credit card debts fall under Justice Court dollar limits. Under Rule 508.2, every debt-claim petition must disclose (1) the charge-off balance, (2) a post-charge-off itemization of any additional interest, fees, or expenses claimed, and (3) the complete chain of assignment from the original creditor to the current plaintiff, including each transfer date and the name of each assignee. These are not optional elements — a petition missing any of them is facially defective.

The alignment between Rule 508.2 and the 2015 CFPB consent order is direct: the consent order required Encore's subsidiaries to obtain exactly this documentation before filing suit, and Rule 508.2 requires them to disclose it in every Texas Justice Court petition. A Rule 508.2 attack on a defective petition is available to defendants in every Texas county and every Texas appellate district — it does not depend on the 803(6) doctrine split at all.

For cases in District or County Court (where dollar amounts exceed Justice Court limits), the standard Texas Rules of Civil Procedure apply, and Tex. R. Civ. P. 94 governs affirmative defenses. The Rule 508.2 disclosure requirements do not directly apply in District Court, but equivalent arguments about the complaint's failure to identify the chain of assignment can be raised under the Texas pleading standards.

For credit card debt and most consumer accounts in Texas, the statute of limitations is four years under Tex. Civ. Prac. & Rem. Code § 16.004, which applies to breach of written contract. Courts treat a credit card account as a written contract for limitations purposes.

The four-year clock typically begins running on the date of default — usually the date of your last payment. If your last payment on the account was in January 2020, the limitations period generally expired in January 2024. A lawsuit filed in 2025 would be filed outside the limitations period.

Honest caveat on the clock start: some Texas courts have applied a charge-off date rather than a last-payment date as the triggering event, depending on the specific contract terms and circumstances. If the dates are close to the four-year boundary, the exact trigger can become a contested issue. Calculate from both dates if you are near the line.

Texas Finance Code § 392.307(d) layers on the strongest no-revival rule in the country for debt-buyer plaintiffs. Once the four-year SOL has run on a debt held by a debt buyer — as opposed to the original creditor — no subsequent payment, partial payment, or written acknowledgment can restart the clock. This categorical bar is unique to Texas and to cases where the plaintiff is a debt buyer rather than the original creditor who extended the credit. It means that any partial payment made to MCM after the four-year period has already run cannot be used by Midland to argue the clock has restarted.

The statute of limitations is an affirmative defense in Texas that must be specifically pleaded in your Answer under Tex. R. Civ. P. 94. If you fail to raise it in your Answer, you waive it for the rest of the case. Calculate your dates before filing your Answer and raise the defense even if you are not certain the deadline has passed — the defense can be developed through discovery.

Texas's defense framework against Midland Funding combines four distinct layers, and their strength varies by component.

The first layer is the state and federal regulatory record, which applies statewide. The 2011 Texas AG enforcement action against Midland Funding LLC, Midland Credit Management Inc., and Encore Capital Group in Harris County District Court — producing a $500,000 settlement and affidavit reforms — documents that Midland's practice of filing inadequate affidavits specifically violated Texas state law. The 2015 and 2020 CFPB enforcement actions against Encore Capital add over $67 million in federal regulatory consequences for the same underlying documentation failures. This record is available to Texas defendants regardless of county or appellate district.

The second layer is the Tex. R. Evid. 803(6) foundation defense, whose strength varies dramatically by appellate district. If your case is in Dallas or El Paso, you have binding appellate authority — Martinez, Riddle, Powell — requiring personal knowledge of the original creditor's records. If your case is in Houston's First District jurisdiction, you face a more permissive standard under Simien. Everywhere else, the defense is still worth making — the El Paso and Dallas cases are persuasive authority — but the outcome is less predictable.

The third layer is the statewide procedural framework: Rule 508.2 chain-of-title and itemization requirements in Justice Court; the four-year SOL under § 16.004; and the categorical no-revival rule under § 392.307(d). These apply to every Midland lawsuit in every Texas county regardless of appellate district.

The fourth layer is the Texas Debt Collection Act and the federal FDCPA. If Midland's collection conduct — its affidavits, its demand letters, or its litigation tactics — violated Tex. Fin. Code Chapter 392 or the federal FDCPA, a counterclaim for statutory damages and attorney's fees creates additional downside risk for Midland and substantial settlement leverage for you.

The three most common procedural failures that Midland commits in Texas — and that the 2011 AG action and 2015 CFPB order documented — are: filing affidavits without proper authentication of the original creditor's record-keeping; suing on debts where the four-year clock has already run without disclosure to the consumer; and failing to adequately document the chain of title from the original creditor to Midland Funding LLC. Filing an Answer that raises these defenses is the difference between a default judgment for Midland and a contested case that Midland may not be able to win.

I'm John DiSalle. In April 2026, I won my own debt-buyer case pro se in Eau Claire County, Wisconsin — Plaza Services LLC v. DiSalle, Case No. 2025SC000885, dismissed April 9, 2026. I had no lawyer and no courtroom experience. I read the original credit agreement, found the mandatory arbitration clause, filed a Motion to Compel Arbitration, and the case was dismissed when the plaintiff failed to comply with AAA's procedural requirements.

Texas's defense framework is structurally different from what I had in Wisconsin. Texas has the strongest single state attorney general enforcement action against Midland in the country — the 2011 Harris County $500,000 settlement. Texas also has a categorical no-revival rule under § 392.307(d) that Wisconsin lacks. But Texas's case-law defense strength on the foundational evidence question is geographically variable in a way that Wisconsin's is not. The appellate-district map matters here in a way it does not in most states.

I built Answered to give pro se Texas defendants the same informed playbook professional debt-defense attorneys use — including the appellate-district map, the documented regulatory record, and the specific procedural defenses that have been upheld under Texas law. For the longer story, visit /about/john-disalle.

First: do not ignore the lawsuit. In Justice Court, where most Texas Midland cases are filed, the answer deadline is generally 14 days from the date of service under Tex. R. Civ. P. 502.5. This is the shortest answer deadline in the Answered network. Missing it means Midland can move immediately for a default judgment. For cases in County Court or District Court, the deadline is the Monday following 20 days after service under Tex. R. Civ. P. 99(b).

Second: identify your appellate district. Search your Texas county on the Texas Judicial Branch court locator at txcourts.gov to confirm which court of appeals covers your case. If you are in a Dallas (5th) or El Paso (8th) county, you have binding defense-favorable precedent on the 803(6) foundation issue. If you are in a Houston First District county, you are in creditor-favorable territory under Simien. Everywhere else, the defense is viable on persuasive authority.

Third: file an Answer that asserts the following defenses where applicable. The Tex. R. Evid. 803(6) foundation challenge — Midland's MCM custodian lacks personal knowledge of the original creditor's record-keeping practices. The statute of limitations under Tex. Civ. Prac. & Rem. Code § 16.004 with the categorical no-revival rule under Tex. Fin. Code § 392.307(d). Rule 508.2 defects if the petition is missing the chain-of-assignment disclosures or post-charge-off itemization. Failure to state a cause of action. Account stated cannot be established without authenticated records.

Fourth: consider an arbitration motion if the original cardholder agreement contains a binding arbitration clause. Under Tex. Civ. Prac. & Rem. Code § 171.021, Texas courts must compel arbitration when a valid agreement exists. Most major-issuer cardholder agreements (Capital One, Synchrony, Citibank, Chase) contain arbitration clauses, and the cost of AAA or JAMS administration typically exceeds the value of a small debt-collection case.

Fifth: consider a Texas Debt Collection Act counterclaim under Tex. Fin. Code Chapter 392 and a federal FDCPA counterclaim if Midland's conduct — its affidavits, demand letters, or litigation tactics — violated those statutes. The 2011 AG settlement and the 2015 and 2020 CFPB consent orders document a pattern of conduct that supports this inquiry.

Answered's Texas playbook was reviewed by a Texas-licensed consumer-rights attorney. Upload your summons and petition to identify the specific defects, calculate your deadline, and generate a court-ready Answer formatted for Texas Justice Court or District Court — start with the $60 Answer Packet, or choose $99 Full Defense for deeper workflow support. No subscription.