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  83R6096 ATP-D
 
  By: Carona S.B. No. 1247
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  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) [(8)]  threatening to take an action prohibited by
  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; [and]
               (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 [member of the United States military or a
  dependent of a member of the United States military] or that the
  business assisted a military borrower [that person] in obtaining
  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.