Bill Text: TX SB1761 | 2019-2020 | 86th Legislature | Introduced
Bill Title: Relating to credit services organizations and extensions of consumer credit facilitated by credit services organizations; providing civil and administrative penalties.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2019-03-14 - Referred to Business & Commerce [SB1761 Detail]
Download: Texas-2019-SB1761-Introduced.html
86R9729 GRM-D | ||
By: West | S.B. No. 1761 |
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relating to credit services organizations and extensions of | ||
consumer credit facilitated by credit services organizations; | ||
providing civil and administrative penalties. | ||
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(b) or any penalties associated with | ||
a violation of that section; or | ||
(9) [ |
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law. | ||
SECTION 2. Section 393.001, Finance Code, is amended by | ||
amending Subdivisions (1) and (3) and adding Subdivisions (1-a), | ||
(2-a), (3-a), (4-a), (5), (6), (7), (8), (9), (10), (11), (12), and | ||
(13) to read as follows: | ||
(1) "Commissioner" means the consumer credit | ||
commissioner. | ||
(1-a) "Consumer" means an individual who is solicited | ||
to purchase or who purchases the services of a credit services | ||
organization. | ||
(2-a) "Credit access business" means a credit services | ||
organization that obtains for a consumer or assists a consumer in | ||
obtaining an extension of consumer credit. | ||
(3) "Credit services organization" means a person who | ||
provides, or represents that the person can or will provide, for the | ||
payment of valuable consideration any of the following services | ||
with respect to the extension of consumer credit by others: | ||
(A) improving a consumer's credit history or | ||
rating; | ||
(B) obtaining an extension of consumer credit for | ||
a consumer in the form of a single-payment deferred presentment | ||
transaction, a multiple-payment deferred presentment transaction, | ||
a single-payment motor vehicle title loan, or a multiple-payment | ||
motor vehicle title loan; or | ||
(C) providing advice or assistance to a consumer | ||
with regard to Paragraph (A) or (B). | ||
(3-a) "Deferred presentment transaction" means a | ||
single-payment or multiple-payment transaction defined as a | ||
deferred presentment transaction by Section 341.001 in connection | ||
with which the consumer is not required to provide real or personal | ||
property as security. | ||
(4-a) "Finance commission" means the Finance | ||
Commission of Texas. | ||
(5) "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. | ||
(6) "Motor vehicle title loan" means a single-payment | ||
or multiple-payment loan in which an unencumbered motor vehicle is | ||
given as the only security for the loan. The term does not include a | ||
retail installment transaction under Chapter 348 or another loan | ||
made to finance the purchase of a motor vehicle. | ||
(7) "Multiple-payment deferred presentment | ||
transaction" means a deferred presentment transaction that is not a | ||
single-payment deferred presentment transaction. | ||
(8) "Multiple-payment motor vehicle title loan" means | ||
a motor vehicle title loan that is not a single-payment motor | ||
vehicle title loan. | ||
(9) "Office" means the Office of Consumer Credit | ||
Commissioner. | ||
(10) "Refinance" means a rollover, renewal, or other | ||
type of transaction in which all or a portion of the principal, | ||
fees, or interest due under an outstanding extension of consumer | ||
credit becomes due on a later date. The term does not include an | ||
extended payment plan described by Section 393.636. The term | ||
includes a new extension of consumer credit that: | ||
(A) consists of debt arising from principal, | ||
fees, or interest that was not paid in full under an outstanding or | ||
previous extension of consumer credit; or | ||
(B) is made on or before the seventh day after the | ||
date a previous extension of consumer credit that a credit access | ||
business obtained for a consumer or assisted a consumer in | ||
obtaining was paid in full. | ||
(11) "Service" means an act, conduct, or activity that | ||
is performed or to be performed for a consumer's benefit or that | ||
involves assisting a consumer in obtaining an extension of consumer | ||
credit, including: | ||
(A) negotiating or closing a loan or other | ||
extension of consumer credit; | ||
(B) issuing a guaranty, letter of credit, or | ||
other credit enhancement; and | ||
(C) servicing an extension of consumer credit. | ||
(12) "Single-payment deferred presentment | ||
transaction" means a deferred presentment transaction for which the | ||
entire cash advance, interest, and fees are required under the | ||
terms of the transaction to be payable in a single payment. | ||
(13) "Single-payment motor vehicle title loan" means a | ||
motor vehicle title loan for which the entire principal, interest, | ||
and fees are required under the terms of the loan to be payable in a | ||
single payment. | ||
SECTION 3. Section 393.201, Finance Code, is amended by | ||
amending Subsections (b) and (c) and adding Subsection (d) to read | ||
as follows: | ||
(b) In addition to the notice required by Section 393.202, | ||
the contract must: | ||
(1) contain the payment terms, including the total | ||
payments to be made by the consumer, whether to the organization or | ||
to another person; | ||
(2) fully describe the services the organization shall | ||
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including each guarantee and each promise of a full or partial | ||
refund and the estimated period for performing and completing all | ||
of the services, not to exceed 180 days or the period permitted | ||
under an extended payment plan authorized by Subchapter G; | ||
(3) contain the address of the organization's | ||
principal place of business; and | ||
(4) contain the name and address of the organization's | ||
agent in this state authorized to receive service of process. | ||
(c) A contract with a credit access business[ |
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Subsection (b) and Section 393.302: | ||
(1) contain a statement that there is no prepayment | ||
penalty; | ||
(2) contain a statement that a credit access business | ||
must comply with Chapter 392 and the federal Fair Debt Collection | ||
Practices Act (15 U.S.C. Section 1692 et seq.) with respect to an | ||
extension of consumer credit [ |
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(3) contain a statement that a person may not threaten | ||
or pursue criminal charges against a consumer related to a check or | ||
other debit authorization provided by the consumer as security for | ||
a transaction in the absence of forgery, fraud, theft, or other | ||
criminal conduct; | ||
(4) contain a statement that a credit access business | ||
must comply, to the extent applicable, with 10 U.S.C. Section 987 | ||
and any regulations adopted under that law with respect to an | ||
extension of consumer credit [ |
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(5) disclose to the consumer: | ||
(A) the lender from whom the extension of | ||
consumer credit is obtained; | ||
(B) the interest paid or to be paid to the lender; | ||
and | ||
(C) the specific fees that will be paid to the | ||
credit access business for the business's services and to any third | ||
party; [ |
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(6) contain the name and address of the office, the | ||
office's website address, [ |
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and the telephone number of the office's consumer helpline; and | ||
(7) use model contract clauses adopted by rule of the | ||
finance commission. | ||
(d) The finance commission shall adopt rules to implement | ||
this section. | ||
SECTION 4. Section 393.203, Finance Code, is amended to | ||
read as follows: | ||
Sec. 393.203. ISSUANCE OF CONTRACT AND OTHER DOCUMENTS. | ||
(a) A credit services organization shall give to the consumer, when | ||
the document is signed, a copy of the completed contract and any | ||
other document the organization requires the consumer to sign. | ||
(b) The contract and other documents provided by a credit | ||
access business to a consumer under this section in relation to an | ||
extension of consumer credit must be: | ||
(1) provided, before signing, wholly written in both | ||
English and Spanish; | ||
(2) written in plain language designed to be easily | ||
understood by the average consumer; and | ||
(3) printed in an easily readable font and type size. | ||
(c) The finance commission shall adopt rules to implement | ||
this section. | ||
SECTION 5. Section 393.223(a), Finance Code, is amended to | ||
read as follows: | ||
(a) Before performing services described by Section | ||
393.001(2-a) [ |
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a consumer a disclosure adopted by rule of the finance commission | ||
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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; and | ||
(3) information regarding the typical pattern of | ||
repayment of deferred presentment transactions and motor vehicle | ||
title loans. | ||
SECTION 6. Subchapter D, Chapter 393, Finance Code, is | ||
amended by adding Section 393.308 to read as follows: | ||
Sec. 393.308. EVASION OF MUNICIPAL ORDINANCE PROHIBITED. | ||
(a) A credit access business that is subject to the regulation of a | ||
municipal ordinance may not, to evade the municipal ordinance: | ||
(1) require, as a condition of obtaining for a | ||
consumer or assisting a consumer in obtaining an extension of | ||
consumer credit in the form of a deferred presentment transaction | ||
or motor vehicle title loan or a renewal, rollover, or refinance of | ||
such an extension of consumer credit, that any part of the | ||
transaction occur in a location outside the municipality; or | ||
(2) transfer the business's obligations and rights | ||
under a contract to obtain for a consumer or assist a consumer in | ||
obtaining an extension of consumer credit in the form of a deferred | ||
presentment transaction or motor vehicle title loan or a renewal, | ||
rollover, or refinance of such an extension of consumer credit to a | ||
branch of the business or another business located outside the | ||
municipality. | ||
(b) For purposes of Subsection (a), "renewal," "rollover," | ||
or "refinance" have any meanings assigned to those terms by the | ||
municipal ordinance. | ||
(c) If a credit access business violates Subsection (a), the | ||
contract between the business and the consumer for the performance | ||
of services to which the violation relates is void and | ||
unenforceable, including any requirement under the contract that | ||
the consumer pay fees or other consideration. | ||
SECTION 7. Sections 393.602(a) and (b), Finance Code, are | ||
amended to read as follows: | ||
(a) This subchapter applies only to a credit services | ||
organization that, with respect to a consumer who is a resident of | ||
this state or is located in this state at the time of the | ||
transaction, obtains for a consumer or assists a consumer in | ||
obtaining an extension of consumer credit [ |
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(b) A credit access business may assess fees as agreed to | ||
between the parties for [ |
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extension of consumer credit for a consumer or assist a consumer in | ||
obtaining an extension of consumer credit in the form of a deferred | ||
presentment transaction or motor vehicle title loan or a refinance | ||
of such an extension of consumer credit [ |
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biweekly, monthly, or on another periodic basis. A credit access | ||
business is permitted to charge amounts allowed by other laws, as | ||
applicable. A fee may not be charged unless it is disclosed. | ||
SECTION 8. Section 393.604(a), Finance Code, is amended to | ||
read as follows: | ||
(a) An application for a license under this subchapter must: | ||
(1) be under oath; | ||
(2) give the approximate location from which the | ||
business is to be conducted; | ||
(3) identify the business's principal parties in | ||
interest; | ||
(4) contain the name, physical address, and telephone | ||
number of all third-party lender organizations: | ||
(A) with which the business contracts to provide | ||
services; [ |
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(B) from which the business arranges extensions | ||
of consumer credit [ |
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(5) include a copy of each agreement between the | ||
business and a third-party lender organization: | ||
(A) with which the business contracts to provide | ||
services; or | ||
(B) from which the business arranges extensions | ||
of consumer credit; and | ||
(6) contain other relevant information that the | ||
commissioner requires for the findings required under Section | ||
393.607. | ||
SECTION 9. Sections 393.622(a) and (b), Finance Code, are | ||
amended to read as follows: | ||
(a) The finance commission may: | ||
(1) adopt rules necessary to enforce and administer | ||
this subchapter; | ||
(2) adopt rules with respect to the quarterly | ||
reporting by a licensed credit access business under Section | ||
393.627 [ |
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(3) adopt rules with respect to periodic examination | ||
by the office relating to extensions of consumer credit the | ||
business obtained for a consumer or assisted a consumer in | ||
obtaining [ |
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related to charges for defraying the reasonable cost of conducting | ||
the examinations. | ||
(b) The finance commission may adopt rules under this | ||
section to allow the commissioner to review, as part of a periodic | ||
examination, any relevant contracts between the credit access | ||
business and the third-party lender organizations with which the | ||
credit access business contracts to provide services [ |
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of consumer credit [ |
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or information obtained by the commissioner under this section is | ||
considered proprietary and confidential to the respective parties | ||
to the contract, and is not subject to disclosure under Chapter 552, | ||
Government Code. | ||
SECTION 10. Section 393.625, Finance Code, is amended to | ||
read as follows: | ||
Sec. 393.625. MILITARY BORROWERS. (a) An extension of | ||
consumer credit [ |
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by a credit access business for a military borrower [ |
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and any regulations adopted under that law, to the extent | ||
applicable. | ||
(b) The term of an extension of consumer credit, 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 single-payment motor vehicle title loan; or | ||
(2) 180 days, if the debt is a multiple-payment motor | ||
vehicle title loan. | ||
(c) The finance commission shall adopt a disclosure | ||
relating to the provisions of state and federal law applicable to a | ||
military borrower who obtains an extension of consumer credit from | ||
or with the assistance of a credit access business. A credit access | ||
business shall provide this disclosure to military borrowers for | ||
whom the credit access business seeks to obtain an extension of | ||
consumer credit. | ||
(d) Notwithstanding Section 14.252, the commissioner may | ||
assess an administrative penalty in an amount not to exceed $5,000 | ||
for each violation against a credit access business that violates | ||
this section, regardless of whether the violation is knowing or | ||
wilful. | ||
SECTION 11. Section 393.626, Finance Code, is amended to | ||
read as follows: | ||
Sec. 393.626. DEBT COLLECTION PRACTICES. A violation of | ||
Chapter 392 by a credit access business with respect to obtaining | ||
for a consumer or assisting a consumer in obtaining an extension of | ||
consumer credit [ |
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violation of this subchapter. | ||
SECTION 12. Section 393.627, Finance Code, is amended to | ||
read as follows: | ||
Sec. 393.627. QUARTERLY REPORT TO COMMISSIONER. A credit | ||
access business shall file a quarterly report with the commissioner | ||
on a form prescribed by the commissioner that provides the | ||
following information relating to extensions of consumer credit | ||
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(1) the number of consumers for whom the business | ||
obtained or assisted in obtaining those extensions of consumer | ||
credit; | ||
(2) the number of those extensions of consumer credit | ||
obtained by the business or that the business assisted consumers in | ||
obtaining; | ||
(3) the number of refinancing transactions of the | ||
extensions of consumer credit described by Subdivision (2); | ||
(4) the number of consumers refinancing the extensions | ||
of consumer credit described by Subdivision (2); | ||
(5) the number of consumers refinancing more than once | ||
the extensions of consumer credit described by Subdivision (2); | ||
(6) the average amount of the extensions of consumer | ||
credit described by Subdivision (2); | ||
(7) the total amount of fees charged by the business | ||
for the activities described by Subdivision (1); | ||
(8) the number of vehicles surrendered or repossessed | ||
under the terms of an extension of consumer credit in the form of a | ||
motor vehicle title loan obtained by the business or that the | ||
business assisted a consumer in obtaining; | ||
(9) the mean, median, and mode of the number of | ||
extensions of consumer credit obtained by consumers as a result of | ||
entering into the extensions of consumer credit described by | ||
Subdivision (2); and | ||
(10) any related information the commissioner | ||
determines necessary. | ||
SECTION 13. Subchapter G, Chapter 393, Finance Code, is | ||
amended by adding Sections 393.629 through 393.638 to read as | ||
follows: | ||
Sec. 393.629. GENERAL LIMITATIONS ON EXTENSIONS OF CONSUMER | ||
CREDIT; PAYMENT METHOD. (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) A credit access business shall accept a payment made in | ||
cash or by electronic transfer, cashier's check, teller's check, or | ||
money order offered by the consumer or another party, to retire or | ||
otherwise pay down debt incurred under an extension of consumer | ||
credit that a credit access business obtained for a consumer or | ||
assisted a consumer in obtaining under this chapter. For a motor | ||
vehicle title loan, a consumer may also grant a security interest in | ||
an authorized debit of a bank account. | ||
(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. | ||
If a term of less than 180 days for an extension of consumer credit | ||
is specified under this chapter, the shorter term applies. | ||
Sec. 393.630. LIMITATION ON OUTSTANDING DEBT. (a) A | ||
consumer may not have more than two outstanding debts from | ||
extensions 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 at that time | ||
has not more than one other outstanding debt from an extension of | ||
consumer credit that any credit access business obtained for the | ||
consumer or assisted the consumer in obtaining. | ||
(c) 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. A person acting on behalf of a credit access business | ||
has satisfied this requirement 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. | ||
(d) A credit access business that violates this section is | ||
subject to a civil penalty in an amount not to exceed $1,000 for | ||
each violation. | ||
Sec. 393.631. CERTAIN LOCAL ORDINANCES NOT PREEMPTED. This | ||
chapter does not preempt a local ordinance regulating a credit | ||
access business or 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, if the ordinance is | ||
compatible with and equal to or more stringent than a requirement | ||
prescribed by this chapter. | ||
Sec. 393.632. SINGLE-PAYMENT DEFERRED PRESENTMENT | ||
TRANSACTION. (a) 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 or longer than 35 days. | ||
(b) 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 three times. | ||
(c) If a consumer who has not entered into an extended | ||
payment plan with the credit access business in the preceding 12 | ||
months refinances a single-payment deferred presentment | ||
transaction for the third time: | ||
(1) the credit access business must offer at least one | ||
extended payment plan to the consumer before initiating any debt | ||
collection activities; | ||
(2) the consumer may request, prior to the offer | ||
required by Subdivision (1) being made, an extended payment plan at | ||
any time on or after the date the consumer refinances the deferred | ||
presentment transaction for the third time and on or before the | ||
fifth day after the date on which the third refinance must be repaid | ||
in full; | ||
(3) to comply with the requirement of Subdivision (1), | ||
the credit access business shall send a written notice to the | ||
consumer disclosing the following: | ||
(A) the amount due under the current terms of the | ||
extension of consumer credit if the consumer declines an extended | ||
payment plan; | ||
(B) the amounts due on each of the installment | ||
dates of an extended payment plan; and | ||
(C) the date by which the consumer must accept | ||
the extended payment plan in writing, which date shall be at least | ||
five days after the date of such notice; | ||
(4) the credit access business may not initiate debt | ||
collection activities unless: | ||
(A) the consumer fails to accept the extended | ||
payment plan in writing on or before the deadline contained in the | ||
notice required by Subdivision (3); | ||
(B) the consumer declines the extended payment | ||
plan; or | ||
(C) the consumer fails to make a payment required | ||
by an extended payment plan that the consumer accepted; and | ||
(5) if the consumer declines an extended payment plan | ||
that a credit access business is required to offer under | ||
Subdivision (1), the consumer must sign an extended payment plan | ||
waiver on a form prescribed by the finance commission. | ||
(d) An extended payment plan required to be offered under | ||
Subsection (c) must comply with Section 393.636. | ||
(e) A credit access business may offer a consumer an | ||
extended payment plan that provides the consumer with additional | ||
time to repay the debts obtained through a single-payment deferred | ||
presentment transaction, either before or after the consumer | ||
refinances the single-payment deferred presentment transaction for | ||
the third time, more than once in a 12-month period so long as the | ||
credit access business does not assess additional fees under the | ||
extended payment plan and the credit access business fully | ||
describes the terms of the extended payment plan, including all due | ||
dates and the amount due on each due date, to the consumer before | ||
the consumer enters into the extended payment plan. An extended | ||
payment plan offered under this subsection is not required to | ||
comply with Section 393.636. | ||
(f) A credit access business shall accept a partial payment | ||
that complies with Section 393.629(b) paid by a consumer or on | ||
behalf of a consumer to pay down outstanding principal owed under a | ||
single-payment deferred presentment transaction that the credit | ||
access business obtained for the consumer or assisted the consumer | ||
in obtaining. | ||
Sec. 393.633. MULTIPLE-PAYMENT DEFERRED PRESENTMENT | ||
TRANSACTION. (a) 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 or have an original term of more than 180 days, and the | ||
loan agreement must specify the number, date, and total amount due | ||
with regard to each installment. | ||
(b) An original or refinanced 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. If a credit access business precomputes its fees under a | ||
multiple-payment deferred presentment transaction and a consumer | ||
prepays in full the extension of consumer credit in that form, the | ||
credit access business shall refund any unearned fees to the | ||
consumer. | ||
(c) 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. | ||
(d) 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 refinanced, may not include more than 12 | ||
installments, and may not have a term that exceeds 180 days, | ||
excluding an extended payment plan offered in compliance with | ||
Section 393.636. | ||
(e) A credit access business may offer a consumer an | ||
extended payment plan if the extended payment plan complies with | ||
Section 393.636 and if the credit access business fully describes | ||
the terms of the extended payment plan, including all due dates and | ||
the amount due on each due date, to the consumer before the consumer | ||
enters into the extended repayment plan. | ||
Sec. 393.634. SINGLE-PAYMENT MOTOR VEHICLE TITLE LOAN. | ||
(a) 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 or longer than 35 | ||
days. | ||
(b) 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 three times. The combined terms of | ||
the original extension of consumer credit and any refinanced | ||
extensions of consumer credit, excluding an extended payment plan | ||
offered in compliance with Subsection (e) or Section 393.636, may | ||
not exceed 90 days. The credit access business shall fully describe | ||
the terms of an extended payment plan, including all due dates and | ||
the amount due on each due date, to the consumer before the consumer | ||
enters into the extended payment plan. | ||
(c) If a consumer who has not entered into an extended | ||
payment plan with the credit access business in the preceding 12 | ||
months refinances a single-payment motor vehicle title loan for the | ||
third time: | ||
(1) the credit access business must offer at least one | ||
extended payment plan to the consumer before initiating any | ||
activities to repossess the vehicle securing the debt; | ||
(2) the consumer may request, prior to the offer | ||
required by Subdivision (1) being made, an extended payment plan at | ||
any time on or after the date the consumer refinances the motor | ||
vehicle title loan for the third time and on or before the fifth day | ||
after the date on which the third refinance must be repaid in full; | ||
(3) to comply with the requirement of Subdivision (1), | ||
the credit access business shall send a written notice to the | ||
consumer disclosing the following: | ||
(A) the amount due under the current terms of the | ||
extension of consumer credit if the consumer declines an extended | ||
payment plan; | ||
(B) the amounts due on each of the installment | ||
dates of an extended payment plan; and | ||
(C) the date by which the consumer must accept | ||
the extended payment plan in writing, which date shall be at least | ||
five days after the date of such notice; | ||
(4) the credit access business may not repossess the | ||
vehicle securing the debt unless: | ||
(A) the consumer fails to accept the extended | ||
payment plan in writing on or before the deadline contained in the | ||
notice required by Subdivision (3); | ||
(B) the consumer declines the extended payment | ||
plan; or | ||
(C) the consumer fails to make a payment required | ||
by an extended payment plan that the consumer accepted; and | ||
(5) if the consumer declines an extended payment plan | ||
that a credit access business is required to offer under | ||
Subdivision (1), the consumer must sign an extended payment plan | ||
waiver on a form prescribed by the finance commission. | ||
(d) An extended payment plan required to be offered under | ||
Subsection (c) must comply with Section 393.636. | ||
(e) A credit access business may offer a consumer an | ||
extended payment plan that provides the consumer with additional | ||
time to repay the debts obtained through a single-payment motor | ||
vehicle title loan, either before or after the consumer refinances | ||
the single-payment motor vehicle title loan for the third time, | ||
more than once in a 12-month period so long as the credit access | ||
business does not assess additional fees under the extended payment | ||
plan and the credit access business fully describes the terms of the | ||
extended payment plan, including all due dates and the amount due on | ||
each due date, to the consumer before the consumer enters into the | ||
extended payment plan. An extended payment plan offered under this | ||
subsection is not required to comply with Section 393.636. | ||
(f) A credit access business shall accept a partial payment | ||
that complies with Section 393.629(b) paid by a consumer or on | ||
behalf of a consumer to pay down outstanding principal owed under a | ||
single-payment motor vehicle title loan that the credit access | ||
business obtained for the consumer or assisted the consumer in | ||
obtaining. | ||
Sec. 393.635. MULTIPLE-PAYMENT MOTOR VEHICLE TITLE LOAN. | ||
(a) 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. If a credit access | ||
business precomputes its fees under a multiple-payment motor | ||
vehicle title loan and a consumer prepays the loan in full, the | ||
credit access business shall refund any unearned fees to the | ||
consumer. | ||
(b) 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. | ||
(c) 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 28th day after the date the previous | ||
installment of the loan is due. | ||
(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 refinanced and the loan term may not exceed 180 days, | ||
except as provided by Subsection (e). | ||
(e) 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 at least one extended payment plan. An extended payment | ||
plan may cause the extension of consumer credit to extend beyond 180 | ||
days so long as the extended payment plan complies with Section | ||
393.636 and the credit access business fully describes the terms of | ||
the extended payment plan, including all due dates and the amount | ||
due on each due date, to the consumer before the consumer enters | ||
into the extended payment plan. | ||
(f) If the credit access business is required to offer a | ||
consumer an extended payment plan under Subsection (e), the credit | ||
access business shall send a written notice to the consumer | ||
disclosing the following: | ||
(1) the amount due under the current terms of the | ||
extension of consumer credit if the consumer declines an extended | ||
payment plan; | ||
(2) the amounts due on each of the installment dates of | ||
an extended payment plan; and | ||
(3) the date by which the consumer must accept the | ||
extended payment plan in writing, which date shall be at least five | ||
days after the date of such notice. | ||
(g) The credit access business may not repossess the vehicle | ||
securing the debt unless: | ||
(1) the consumer fails to accept the extended payment | ||
plan in writing on or before the deadline contained in the notice | ||
required by Subsection (f)(3); | ||
(2) the consumer declines the extended payment plan; | ||
or | ||
(3) the consumer fails to make a payment required by an | ||
extended payment plan that the consumer accepted. | ||
(h) If the consumer declines the extended payment plan, the | ||
consumer must sign an extended payment plan waiver on a form | ||
prescribed by the finance commission. | ||
Sec. 393.636. EXTENDED PAYMENT PLAN REQUIREMENTS. | ||
(a) This section applies to extended payment plans required to be | ||
offered under Sections 393.632, 393.633, 393.634, and 393.635. | ||
(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 substantially equal installments added to the | ||
original and refinanced term of the extension of consumer credit, | ||
after which the outstanding balance, including only the fees that | ||
would have been due under the original extension of consumer | ||
credit, will be paid in full, with respect to a multiple-payment | ||
deferred presentment transaction or multiple-payment motor vehicle | ||
title loan. | ||
(c) The period between installment payments on an extended | ||
payment plan may not be shorter than: | ||
(1) 10 days, with respect to a single-payment deferred | ||
presentment transaction; or | ||
(2) 30 days, with respect to a multiple-payment | ||
deferred presentment transaction, a single-payment motor vehicle | ||
title loan, or a 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 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. | ||
(h) A person may not use a device, subterfuge, or pretense | ||
to evade the extended payment plan requirements and limitations | ||
imposed on a credit access business under this subchapter. | ||
Sec. 393.637. REFINANCES. (a) Any refinance of an | ||
extension of consumer credit that a credit access business obtains | ||
for a consumer or assists a consumer in obtaining: | ||
(1) must be authorized under this subchapter; | ||
(2) must be in the same form as the original extension | ||
of consumer credit; and | ||
(3) must meet all the requirements applicable to the | ||
original extension of consumer credit, including the duration, | ||
transaction, and extended payment plan requirements under this | ||
subchapter, except as otherwise provided by this chapter. | ||
(b) For purposes of this section, a single-payment deferred | ||
presentment transaction, a multiple-payment deferred presentment | ||
transaction, a single-payment motor vehicle title loan, and a | ||
multiple-payment motor vehicle title loan are the different forms | ||
of extensions of consumer credit that a credit access business may | ||
obtain for a consumer or assist a consumer in obtaining. | ||
(c) The terms of a refinanced extension of consumer credit | ||
may be the same as or different from the terms of the original | ||
extension of consumer credit. | ||
(d) A person may not use a device, subterfuge, or pretense | ||
to evade the refinance requirements and limitations imposed on a | ||
credit access business under this subchapter. | ||
Sec. 393.638. RULES. The finance commission shall adopt | ||
any rules necessary to implement Sections 393.629-393.637. | ||
SECTION 14. Sections 393.221 and 393.601, Finance Code, are | ||
repealed. | ||
SECTION 15. 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 16. Section 393.308, Finance Code, as added by this | ||
Act, applies only to a contract entered into on or after the | ||
effective date of this Act. A contract entered into before the | ||
effective date of this Act is governed by the law in effect when the | ||
contract was entered into, and the former law is continued in effect | ||
for that purpose. | ||
SECTION 17. This Act takes effect September 1, 2019. |