Paltauf was last seen at approximately 8:30 p.m. on July 7, 2006 at a Budget Inn hotel in the vicinity of Interstate 35 and Rundberg in Austin, Texas. She had checked into the hotel with her boyfriend, Louis Walls.

She planned to spend a few days with him, but Walls said they got into an argument and she left angrily, carrying only her identification. Walls stated he tried to follow her, but she told him to leave her alone so he went back to their room.

Approximately 20 minutes later he went looking for her again but could not find her. She has never been heard from again. Walls called her mother the following day, and her mother reported her disappearance to police.

By the time the police got involved, Walls had already checked out of the hotel and gone to his sister's home, taking Paltauf's belongings with him, so any possible evidence in the hotel room was destroyed.

Paltauf left behind all her personal belongings including her clothing, shoes, purse, wallet, jewelry and cellular phone, which is uncharacteristic of her. Her boyfriend returned the cellular phone to her family on July 12. Over three hundred calls were placed on it between July 8 and July 12; many of them were to Walls's ex-girlfriend in New Mexico.

Walls has a criminal record that dates back to 1995. Paltauf's mother didn't approve of Walls and Walls's mother didn't approve of Paltauf, so the couple would usually go out to be together. Her friends also disliked Walls, who initially lied to Paltauf about his age. He told her he was nineteen years old when they started dating, when he was in fact twenty-eight.

They had been together for two years by the time Paltauf vanished, and she often took care of his two children. One of Paltauf's friends stated she said Walls had hit her, seriously damaging her nose. He has a history of threatening other girlfriends, and at least two of them took out protective orders against him. Walls has never been charged in connection with Paltauf's disappearance, however.

Curiously, Paltauf's state of Texas identification card turned up in the wallet of another man, Geoffrey Moore, who was accused of attacking an exotic dancer and trying to rape her. The incident took place on July 13, six days after Paltauf's disappearance, at a Motel 6 not far from the Budget Inn she disappeared from.

Charges against Moore were later dropped for lack of evidence, but although police spoke to him about Paltauf it isn't clear how he came to possess her identification. Both Moore and Walls are considered persons of interest in Paltauf's case.

Paltauf's family describes her as a responsible teenager who was devoted to her four younger siblings. She kept in daily contact with her mother, whom she was close to. She had dropped out of McCallum High School in her junior year, enrolled in job training and was studying for her GED.

She had passed all the sections of the GED exam except mathematics, and had taken a second job. She dreamed of becoming a fashion designer. Her mother believes foul play was involved in her disappearance; it remains unsolved.