Bill Text: TX HB2706 | 2013-2014 | 83rd Legislature | Introduced
Bill Title: Relating to certain extensions of consumer credit facilitated by credit access businesses; providing a civil penalty.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2013-04-22 - No action taken in committee [HB2706 Detail]
Download: Texas-2013-HB2706-Introduced.html
83R6096 ATP-D | ||
By: Villarreal | H.B. No. 2706 |
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relating to certain extensions of consumer credit facilitated by | ||
credit access businesses; providing a civil penalty. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 392.301(a), Finance Code, is amended to | ||
read as follows: | ||
(a) In debt collection, a debt collector may not use | ||
threats, coercion, or attempts to coerce that employ any of the | ||
following practices: | ||
(1) using or threatening to use violence or other | ||
criminal means to cause harm to a person or property of a person; | ||
(2) accusing falsely or threatening to accuse falsely | ||
a person of fraud or any other crime; | ||
(3) representing or threatening to represent to any | ||
person other than the consumer that a consumer is wilfully refusing | ||
to pay a nondisputed consumer debt when the debt is in dispute and | ||
the consumer has notified in writing the debt collector of the | ||
dispute; | ||
(4) threatening to sell or assign to another the | ||
obligation of the consumer and falsely representing that the result | ||
of the sale or assignment would be that the consumer would lose a | ||
defense to the consumer debt or would be subject to illegal | ||
collection attempts; | ||
(5) threatening that the debtor will be arrested for | ||
nonpayment of a consumer debt without proper court proceedings; | ||
(6) threatening to file a charge, complaint, or | ||
criminal action against a debtor when the debtor has not violated a | ||
criminal law; | ||
(7) threatening that nonpayment of a consumer debt | ||
will result in the seizure, repossession, or sale of the person's | ||
property without proper court proceedings; | ||
(8) referencing a certification signed by the consumer | ||
as required by Section 393.630 or the penalties associated with a | ||
violation of that section; or | ||
(9) [ |
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law. | ||
SECTION 2. Subchapter A, Chapter 393, Finance Code, is | ||
amended by adding Section 393.004 to read as follows: | ||
Sec. 393.004. LIMITATION ON EXTENSIONS OF CONSUMER CREDIT | ||
AND REFINANCING. (a) A credit services organization may not obtain | ||
for a consumer or assist a consumer in obtaining an extension of | ||
consumer credit in any form other than in the form of a deferred | ||
presentment transaction that meets the requirements of Section | ||
393.634 or 393.635, or a motor vehicle title loan that meets the | ||
requirements of Section 393.636 or 393.637. | ||
(b) Any refinance of an extension of consumer credit in the | ||
form of a deferred presentment transaction or motor vehicle title | ||
loan that a credit services organization obtains for a consumer or | ||
assists a consumer in obtaining: | ||
(1) must be authorized under Subchapter G; | ||
(2) may not advance additional cash to the consumer; | ||
and | ||
(3) must meet all the requirements under Subchapter G | ||
applicable to the original extension of consumer credit, except as | ||
specifically provided otherwise by an applicable provision of | ||
Subchapter G. | ||
SECTION 3. Section 393.222, Finance Code, is amended by | ||
adding Subsection (a-1) to read as follows: | ||
(a-1) A credit access business shall post, in the same | ||
manner as a notice required under Subsection (a), and provide as a | ||
separate document to a consumer, a notice prescribed by the Finance | ||
Commission of Texas regarding the availability of extended payment | ||
plans that describes the parameters of the plans. | ||
SECTION 4. Section 393.223(a), Finance Code, is amended to | ||
read as follows: | ||
(a) Before performing services described by Section | ||
393.221(1), a credit access business must provide to a consumer a | ||
disclosure adopted by rule of the Finance Commission of Texas that | ||
discloses the following in a form prescribed by the commission: | ||
(1) the interest, fees, and annual percentage rates, | ||
as applicable, to be charged on a deferred presentment transaction | ||
or on a motor vehicle title loan, as applicable, in comparison to | ||
interest, fees, and annual percentage rates to be charged on other | ||
alternative forms of consumer debt; | ||
(2) the amount of accumulated fees a consumer would | ||
incur by renewing or refinancing a deferred presentment transaction | ||
or motor vehicle title loan that remains outstanding for a period of | ||
two weeks, one month, two months, and three months; [ |
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(3) information regarding the typical pattern of | ||
repayment of deferred presentment transactions and motor vehicle | ||
title loans; and | ||
(4) the name of the credit access business and any | ||
unique number assigned to the license issued to the business under | ||
Subchapter G. | ||
SECTION 5. Section 393.625, Finance Code, is amended to | ||
read as follows: | ||
Sec. 393.625. MILITARY BORROWERS. (a) In this section, | ||
"military borrower" includes a "covered member" or a "dependent" of | ||
a covered member, as those terms are defined by 10 U.S.C. Section | ||
987 or a successor statute. | ||
(b) An extension of consumer credit described by Section | ||
393.602(a) that is obtained by a credit access business for a | ||
military borrower [ |
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business assisted a military borrower [ |
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must comply with 10 U.S.C. Section 987 and any regulations adopted | ||
under that law, to the extent applicable. | ||
(c) The term of an extension of consumer credit described by | ||
Section 393.602(a), including all renewals and refinances, | ||
obtained for a military borrower by a credit access business or that | ||
a credit access business assists a military borrower in obtaining | ||
may not exceed: | ||
(1) 90 days, if the debt is a deferred presentment | ||
transaction; or | ||
(2) 180 days, if the debt is a motor vehicle title | ||
loan. | ||
SECTION 6. Subchapter G, Chapter 393, Finance Code, is | ||
amended by adding Sections 393.629 through 393.639 to read as | ||
follows: | ||
Sec. 393.629. GENERAL LIMITATIONS ON EXTENSIONS OF CONSUMER | ||
CREDIT. (a) The provisions of this chapter applicable to a credit | ||
access business apply to any consumer physically located in this | ||
state at the time the extension of consumer credit is made, | ||
regardless of whether the extension of consumer credit was made in | ||
person in this state. | ||
(b) For purposes of this chapter, an extension of consumer | ||
credit obtained for a consumer by a credit access business or that a | ||
credit access business assists a consumer in obtaining on or before | ||
the fifth day after the date the consumer pays the debt on a | ||
previous extension of consumer credit in full is considered a | ||
refinance of the previous debt. | ||
(c) The term of an extension of consumer credit obtained for | ||
a consumer by a credit access business or that a credit access | ||
business assists a consumer in obtaining may not exceed 180 days. | ||
(d) A credit access business that obtains for a consumer or | ||
assists a consumer in obtaining an extension of consumer credit | ||
shall provide to the consumer a copy of the agreement between the | ||
business and the consumer, and all notices required to be given to | ||
the consumer under this chapter, in Spanish if the consumer | ||
requests that the documents be provided in Spanish or if the | ||
agreement is negotiated in Spanish. The executed agreement between | ||
the credit access business and the consumer must be written in | ||
English. | ||
(e) With a consumer's written consent, a debt incurred under | ||
an extension of consumer credit that a credit access business | ||
obtained for the consumer or assisted the consumer in obtaining may | ||
be sold to another credit access business licensed under this | ||
subchapter. All transaction limits applicable to the debt before | ||
the sale apply to the debt after the debt is sold, except that the | ||
term of the extension of consumer credit may not exceed 180 days, | ||
beginning on the date the debt is sold. The sale of a debt under | ||
this subsection is considered to be a refinance of the debt for | ||
purposes of the applicable transaction limits. | ||
(f) Before obtaining for a consumer or assisting a consumer | ||
in obtaining an extension of consumer credit, a credit access | ||
business shall consider the ability of the consumer to repay the | ||
debt within the term provided by law for the original extension of | ||
credit and any authorized renewal or refinance. | ||
Sec. 393.630. LIMITATION ON OUTSTANDING DEBT. (a) A | ||
consumer may have only one outstanding debt from an extension of | ||
consumer credit that a credit access business obtained for the | ||
consumer or assisted the consumer in obtaining. | ||
(b) To obtain an extension of consumer credit facilitated | ||
through the services of a credit access business, a consumer must | ||
sign a written certification stating that the consumer: | ||
(1) at that time has no other outstanding debt from an | ||
extension of consumer credit that any credit access business | ||
obtained for the consumer or assisted the consumer in obtaining; | ||
(2) has not owed a debt subject to an extended payment | ||
plan that a credit access business obtained for the consumer or | ||
assisted the consumer in obtaining during the preceding 14 days; | ||
and | ||
(3) has not gone into default on a debt that a credit | ||
access business obtained for the consumer or assisted the consumer | ||
in obtaining during the preceding 30 days. | ||
(c) For purposes of Subsection (b)(3), a consumer is not | ||
considered in default if the consumer made a payment on a debt on or | ||
before the 10th day after the date the payment was due. | ||
(d) A credit access business shall in good faith verify that | ||
a consumer is not falsifying the certification required by | ||
Subsection (b), to the best knowledge and ability of the person | ||
acting on behalf of the credit access business for that | ||
transaction. | ||
(e) A person acting on behalf of a credit access business | ||
has satisfied the requirement of Subsection (d) if the person | ||
considers all information that the consumer shares with the person | ||
in negotiating the transaction and if the person makes a reasonable | ||
effort to verify the consumer's representations with any records | ||
that the credit access business typically consults in the normal | ||
course of its business. | ||
(f) A consumer who falsifies statements contained in the | ||
certification violates this section. | ||
(g) A credit access business or a consumer who violates this | ||
section is subject to a civil penalty in an amount not to exceed | ||
$1,000 for each violation. | ||
(h) The finance commission shall adopt rules to implement | ||
this section. | ||
Sec. 393.631. LIMITATIONS RELATING TO MOTOR VEHICLE | ||
SECURING DEBT. (a) Notwithstanding any other provision of law, the | ||
proceeds of the sale of a repossessed motor vehicle that secured an | ||
extension of consumer credit shall satisfy all outstanding and | ||
unpaid indebtedness under that extension of credit, and the | ||
consumer is not liable for any deficiency resulting from the sale | ||
unless the consumer has committed fraud in obtaining the extension | ||
of consumer credit. | ||
(b) Any fee charged to a consumer for the repossession of a | ||
motor vehicle given as security for an extension of consumer credit | ||
must be reasonable. | ||
Sec. 393.632. ESTABLISHMENT OF INCOME OR VALUE. (a) A | ||
credit access business must require documentation to establish a | ||
consumer's income for purposes of this subchapter. Acceptable | ||
forms of documentation include: | ||
(1) a payroll document; | ||
(2) a paycheck; | ||
(3) a bank statement; | ||
(4) a report from a nationally or regionally | ||
recognized credit and data reporting company; | ||
(5) Internal Revenue Service Form W-2 from the | ||
preceding year; | ||
(6) the income tax return from the preceding tax year; | ||
(7) a signed letter from the consumer's employer; or | ||
(8) another document approved by finance commission | ||
rule. | ||
(b) A credit access business shall retain a copy of the | ||
documentation used to establish a consumer's income under | ||
Subsection (a) according to the business's standard records | ||
retention policy. | ||
(c) To establish the retail value of a motor vehicle for | ||
purposes of this subchapter, a credit access business must: | ||
(1) rely on a nationally or regionally recognized | ||
vehicle appraisal guide; or | ||
(2) agree in good faith with the consumer to the | ||
vehicle's retail value. | ||
Sec. 393.633. LOCAL ORDINANCES PREEMPTED. An ordinance | ||
adopted by a municipality or other political subdivision regulating | ||
a credit access business or an extension of consumer credit that a | ||
credit access business obtains for a consumer or assists a consumer | ||
in obtaining is preempted to the extent that the ordinance is not | ||
within the political subdivision's standard zoning or police | ||
powers. | ||
Sec. 393.634. SINGLE-PAYMENT DEFERRED PRESENTMENT | ||
TRANSACTION. (a) The principal amount of a cash advance made under | ||
an extension of consumer credit in the form of a single-payment | ||
deferred presentment transaction that a credit access business | ||
obtains for a consumer or assists a consumer in obtaining may not | ||
exceed: | ||
(1) 25 percent of the consumer's gross monthly income, | ||
if the consumer's annual income is not more than 125 percent of the | ||
federal poverty level for a family of four; or | ||
(2) 35 percent of the consumer's gross monthly income, | ||
if the consumer is not described by Subdivision (1) and is not a | ||
military borrower to whom a different limit applies under federal | ||
law. | ||
(b) The term of an original or refinanced extension of | ||
consumer credit in the form of a single-payment deferred | ||
presentment transaction that a credit access business obtains for a | ||
consumer or assists a consumer in obtaining may not be less than 10 | ||
days. | ||
(c) An extension of consumer credit in the form of a | ||
single-payment deferred presentment transaction that a credit | ||
access business obtains for a consumer or assists a consumer in | ||
obtaining may not be refinanced more than four times. | ||
(d) If a consumer has refinanced a single-payment deferred | ||
presentment transaction described by Subsection (c) four times: | ||
(1) the credit access business shall offer an extended | ||
payment plan to the consumer, unless the consumer has entered into | ||
two or more extended payment plans in the preceding 12 months; and | ||
(2) the consumer may request an extended payment plan | ||
at any time on or after the date the consumer refinances the | ||
single-payment deferred presentment transaction for the fourth | ||
time and on or before the date the deferred presentment transaction | ||
must be repaid in full. | ||
(e) An extended payment plan authorized by Subsection (d) | ||
must comply with Section 393.638. | ||
Sec. 393.635. MULTIPLE-PAYMENT DEFERRED PRESENTMENT | ||
TRANSACTION. (a) The sum of all scheduled payments due in a single | ||
month under an extension of consumer credit in the form of a | ||
multiple-payment deferred presentment transaction that a credit | ||
access business obtains for a consumer or assists a consumer in | ||
obtaining may not exceed: | ||
(1) 15 percent of the consumer's gross monthly income, | ||
if the consumer's annual income is not more than 125 percent of the | ||
federal poverty level for a family of four; or | ||
(2) 20 percent of the consumer's gross monthly income, | ||
if the consumer is not described by Subdivision (1) and is not a | ||
military borrower to whom a different limit applies under federal | ||
law. | ||
(b) An extension of consumer credit in the form of a | ||
multiple-payment deferred presentment transaction that a credit | ||
access business obtains for a consumer or assists a consumer in | ||
obtaining may not be payable by the consumer in more than 12 | ||
installments, and the loan agreement must specify the number, date, | ||
and total amount due with regard to each installment. | ||
(c) An extension of consumer credit in the form of a | ||
multiple-payment deferred presentment transaction that a credit | ||
access business obtains for a consumer or assists a consumer in | ||
obtaining must be payable on a fully amortizing, declining | ||
principal balance basis with substantially equal payments. | ||
(d) The first installment of an extension of consumer credit | ||
in the form of a multiple-payment deferred presentment transaction | ||
that a credit access business obtains for a consumer or assists a | ||
consumer in obtaining may not be due before the 10th day after the | ||
date the consumer enters into the loan agreement. An installment | ||
may not be due before the 14th day or after the 31st day after the | ||
date a previous installment is due. | ||
(e) An extension of consumer credit in the form of a | ||
multiple-payment deferred presentment transaction that a credit | ||
access business obtains for a consumer or assists a consumer in | ||
obtaining may be refinanced only one time, and the combined terms of | ||
the original extension of consumer credit and the refinanced | ||
extension of consumer credit may not exceed 270 days. A credit | ||
access business is not required to offer an extended payment plan | ||
for an extension of consumer credit in the form of a | ||
multiple-payment deferred presentment transaction. | ||
Sec. 393.636. SINGLE-PAYMENT MOTOR VEHICLE TITLE LOAN. (a) | ||
The principal amount of a cash advance made under an extension of | ||
consumer credit in the form of a single-payment motor vehicle title | ||
loan that a credit access business obtains for a consumer or assists | ||
a consumer in obtaining may not exceed the lesser of: | ||
(1) six percent of the consumer's gross annual income, | ||
if the consumer's annual income is not more than 125 percent of the | ||
federal poverty level for a family of four; | ||
(2) eight percent of the consumer's gross annual | ||
income, if the consumer is not described by Subdivision (1) and is | ||
not a military borrower to whom a different limit applies under | ||
federal law; or | ||
(3) 70 percent of the retail value of the motor vehicle | ||
securing the debt. | ||
(b) The term of an original or refinanced extension of | ||
consumer credit in the form of a single-payment motor vehicle title | ||
loan that a credit access business obtains for a consumer or assists | ||
a consumer in obtaining may not be less than 30 days. | ||
(c) An extension of consumer credit in the form of a | ||
single-payment motor vehicle title loan that a credit access | ||
business obtains for a consumer or assists a consumer in obtaining | ||
may not be refinanced more than six times. | ||
(d) If a consumer has refinanced a single-payment motor | ||
vehicle title loan described by Subsection (c) six times: | ||
(1) the credit access business must offer an extended | ||
payment plan to the consumer before initiating any activities to | ||
repossess the vehicle securing the debt; and | ||
(2) the consumer may request an extended payment plan | ||
at any time on or after the date the consumer refinances the motor | ||
vehicle title loan for the sixth time and on or before the date the | ||
motor vehicle title loan must be repaid in full. | ||
(e) An extended payment plan authorized by Subsection (d) | ||
must comply with Section 393.638. | ||
Sec. 393.637. MULTIPLE-PAYMENT MOTOR VEHICLE TITLE LOAN. | ||
(a) The principal amount of a cash advance made under an extension | ||
of consumer credit in the form of a multiple-payment motor vehicle | ||
title loan that a credit access business obtains for a consumer or | ||
assists a consumer in obtaining may not exceed 70 percent of the | ||
retail value of the motor vehicle securing the debt. | ||
(b) A scheduled payment under a contract for an extension of | ||
consumer credit in the form of a multiple-payment motor vehicle | ||
title loan that a credit access business obtains for a consumer or | ||
assists a consumer in obtaining may not exceed: | ||
(1) 15 percent of the consumer's gross monthly income, | ||
if the consumer's annual income is not more than 125 percent of the | ||
federal poverty level for a family of four; or | ||
(2) 20 percent of the consumer's gross monthly income, | ||
if the consumer is not described by Subdivision (1) and is not a | ||
military borrower to whom a different limit applies under federal | ||
law. | ||
(c) An extension of consumer credit in the form of a | ||
multiple-payment motor vehicle title loan that a credit access | ||
business obtains for a consumer or assists a consumer in obtaining | ||
must be payable on a fully amortizing, declining principal balance | ||
basis with substantially equal payments. | ||
(d) An extension of consumer credit in the form of a | ||
multiple-payment motor vehicle title loan that a credit access | ||
business obtains for a consumer or assists a consumer in obtaining | ||
may not be payable by the consumer in more than six installments, | ||
and the loan agreement must specify the number, date, and total | ||
amount due with regard to each installment. | ||
(e) The first installment of an extension of consumer credit | ||
in the form of a multiple-payment motor vehicle title loan that a | ||
credit access business obtains for a consumer or assists a consumer | ||
in obtaining may not be due before the 10th day after the date the | ||
consumer enters into the loan agreement. A subsequent installment | ||
may not be due before the 30th day after the date the previous | ||
installment of the loan is due. | ||
(f) An extension of consumer credit in the form of a | ||
multiple-payment motor vehicle title loan that a credit access | ||
business obtains for a consumer or assists a consumer in obtaining | ||
may be refinanced only one time, and the combined terms of the | ||
original extension of consumer credit and the refinanced extension | ||
of consumer credit may not exceed 270 days. | ||
(g) A credit access business may not initiate any activities | ||
to repossess the vehicle securing the debt under a multiple-payment | ||
motor vehicle title loan that a credit access business obtains for a | ||
consumer or assists a consumer in obtaining before offering the | ||
consumer an extended payment plan. An extended payment plan | ||
authorized by this subsection must comply with Section 393.638. | ||
Sec. 393.638. EXTENDED PAYMENT PLAN REQUIREMENTS. (a) | ||
This section applies to extended payment plans permitted under | ||
Sections 393.634, 393.636, and 393.637. | ||
(b) An extended payment plan must provide for payment in at | ||
least: | ||
(1) four substantially equal installments, after | ||
which the outstanding balance will be paid in full, with respect to | ||
a single-payment deferred presentment transaction or | ||
single-payment motor vehicle title loan; or | ||
(2) two additional substantially equal installments, | ||
after which the outstanding balance, including only the fees and | ||
interest that would have been due under the original extension of | ||
consumer credit, will be paid in full, with respect to a | ||
multiple-payment motor vehicle title loan. | ||
(c) The period between installment payments on an extended | ||
payment plan may not be shorter than: | ||
(1) the term of the original extension of credit, with | ||
respect to a single-payment deferred presentment transaction; or | ||
(2) 30 days, with respect to a single-payment or | ||
multiple-payment motor vehicle title loan. | ||
(d) The first payment owed under an extended payment plan | ||
may not be due before the 10th day after the date the consumer | ||
requests an extended payment plan. | ||
(e) A credit access business may not assess additional fees | ||
or interest or assist a consumer in obtaining additional extensions | ||
of consumer credit if the consumer is paying an extension of credit | ||
under an extended payment plan. | ||
(f) A consumer may pay in full a debt subject to an extended | ||
payment plan at any time without prepayment penalties. | ||
(g) A person may not engage in debt collection or vehicle | ||
repossession activities for a debt subject to an extended payment | ||
plan if the consumer is in compliance with the extended payment | ||
plan. | ||
Sec. 393.639. RULES. The finance commission may adopt any | ||
rules necessary to implement Sections 393.629-393.638. | ||
SECTION 7. The changes in law made by this Act apply only to | ||
an extension of consumer credit made on or after the effective date | ||
of this Act. An extension of consumer credit made before the | ||
effective date of this Act is governed by the law in effect on the | ||
date the extension of consumer credit was made, and the former law | ||
is continued in effect for that purpose. For purposes of this | ||
section, a refinance or renewal of an extension of consumer credit | ||
is considered made on the date the extension of consumer credit | ||
being refinanced or renewed was made. | ||
SECTION 8. This Act takes effect September 1, 2013. |