1-1 By: Harris of Tarrant S.B. No. 628
1-2 (In the Senate - Filed March 4, 1993; March 8, 1993, read
1-3 first time and referred to Committee on Economic Development;
1-4 May 4, 1993, reported favorably, as amended, by the following vote:
1-5 Yeas 10, Nays 0; May 4, 1993, sent to printer.)
1-6 COMMITTEE VOTE
1-7 Yea Nay PNV Absent
1-8 Parker x
1-9 Lucio x
1-10 Ellis x
1-11 Haley x
1-12 Harris of Dallas x
1-13 Harris of Tarrant x
1-14 Leedom x
1-15 Madla x
1-16 Rosson x
1-17 Shapiro x
1-18 Wentworth x
1-19 COMMITTEE AMENDMENT NO. 1 By: Harris of Tarrant
1-20 Amend SECTION 1 of S.B. No. 628 as follows:
1-21 On page 1, delete line 53, and substitute the following:
1-22 late charge or any charge for delinquent payment imposed in
1-23 connection with the sale or lease of services or goods which are
1-24 sold or leased at rates or charges which are, in whole or in part,
1-25 fixed, limited, approved, or subject to oversight by a local,
1-26 state, or federal governmental entity if the charge for delinquent
1-27 payment is disclosed in writing on or with the billing statements
1-28 for the services or goods.
1-29 On page 1, line 62, add the following after "indebtedness":
1-30 ; or
1-31 (3) a late charge or any charge for delinquent payment
1-32 imposed in connection with the sale or lease of services or goods
1-33 which are sold or leased at rates or charges which are, in whole or
1-34 in part, fixed, limited, approved, or subject to oversight by a
1-35 local, state, or federal governmental entity if the charge for
1-36 delinquent payment is disclosed in writing on or with the billing
1-37 statements for the services or goods.
1-38 (k) "Creditor" means a person that loans money or otherwise
1-39 extends credit, provided that the term shall not include a judgment
1-40 creditor.
1-41 A BILL TO BE ENTITLED
1-42 AN ACT
1-43 relating to a late charge imposed by a creditor for the failure of
1-44 a debtor to make a scheduled payment when due; providing penalties.
1-45 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-46 SECTION 1. Article 1.01, Title 79, Revised Statutes (Article
1-47 5069-1.01, Vernon's Texas Civil Statutes), is amended by amending
1-48 Section (a) and adding Section (j) to read as follows:
1-49 (a) "Interest" is the compensation allowed by law for the
1-50 use or forbearance or detention of money; provided however, this
1-51 term shall not include any time price differential however
1-52 denominated arising out of a credit sale and does not include a
1-53 late charge.
1-54 (j) "Late charge" means a charge imposed by a creditor in
1-55 connection with the failure of a debtor to make scheduled payments
1-56 when due in connection with the use or forbearance or detention of
1-57 money. A late charge does not include:
1-58 (1) an amount that accrues on a daily or other
1-59 periodic basis; or
1-60 (2) an amount assessed for failure to timely pay a
1-61 scheduled payment that is the final maturity of the full principal
1-62 balance of the indebtedness.
1-63 SECTION 2. Subtitle 1, Title 79, Revised Statutes (Article
1-64 5069-1.01 et seq., Vernon's Texas Civil Statutes), is amended by
1-65 adding Article 1.04A to read as follows:
1-66 Art. 1.04A. LATE CHARGES. (a) A creditor may impose a late
1-67 charge only if:
1-68 (1) the debtor agrees in writing in the loan contract
2-1 or a separate document that the creditor may impose the late
2-2 charge;
2-3 (2) the late charge does not exceed five percent of
2-4 the amount of the unpaid payment, including principal, interest,
2-5 and all escrow amounts, and is not assessed unless the payment is
2-6 not paid within a stated period of 10 or more days after the date
2-7 the payment is due; and
2-8 (3) the creditor does not receive interest on accrued
2-9 interest included in the amount of a delinquent payment for any
2-10 period before maturity of the full principal balance of the
2-11 indebtedness if the creditor actually receives a late charge with
2-12 respect to the payment.
2-13 (b) A contract may provide that a creditor may charge or
2-14 receive, at the creditor's option, either:
2-15 (1) interest on the amount of a delinquent payment,
2-16 including interest, before maturity; or
2-17 (2) a late charge for the payment.
2-18 (c) Notwithstanding the charging or receipt of a late
2-19 charge, interest may continue to accrue on the unpaid principal on
2-20 an indebtedness, including unpaid principal included in the amount
2-21 of the delinquent payment.
2-22 (d) A late charge that complies with this article is not
2-23 subject to avoidance as an unreasonable penalty.
2-24 SECTION 3. Article 1.06, Title 79, Revised Statutes (Article
2-25 5069-1.06, Vernon's Texas Civil Statutes), is amended to read as
2-26 follows:
2-27 Art. 1.06. PENALTIES. (1) Any person who contracts for,
2-28 charges or receives interest which is greater than the amount
2-29 authorized by this Subtitle, shall forfeit to the obligor three
2-30 times the amount of usurious interest contracted for, charged or
2-31 received, such usurious interest being the amount the total
2-32 interest contracted for, charged, or received exceeds the amount of
2-33 interest allowed by law, and reasonable attorney fees fixed by the
2-34 court except that in no event shall the amount forfeited be less
2-35 than Two Thousand Dollars or twenty percent of the principal,
2-36 whichever is the smaller sum; provided, that there shall be no
2-37 penalty for any usurious interest which results from an accidental
2-38 and bona fide error.
2-39 (2) Any person who contracts for, charges or receives
2-40 interest which is in excess of double the amount of interest
2-41 allowed by this Subtitle shall forfeit as an additional penalty,
2-42 all principal as well as interest and all other charges and shall
2-43 pay reasonable attorney fees set by the court; provided further
2-44 that any such person violating the provisions of this section shall
2-45 be guilty of a misdemeanor and upon conviction thereof shall be
2-46 punished by fine of not more than One Thousand Dollars. Each
2-47 contract or transaction in violation of this section shall
2-48 constitute a separate offense punishable hereunder.
2-49 (3) A person who charges or receives a late charge that does
2-50 not comply with Article 1.04A of this Title shall forfeit to the
2-51 obligor:
2-52 (A) three times the amount of the improper late charge
2-53 charged or received; and
2-54 (B) reasonable attorney fees fixed by the court.
2-55 (4) A penalty may not be assessed for a late charge that is
2-56 the result of an accidental and bona fide error.
2-57 (5) All such actions brought under this Article shall be
2-58 brought in any court of this State having jurisdiction thereof
2-59 within four years from the date when the usurious charge was
2-60 received or collected in the county of the defendant's residence,
2-61 or in the county where the interest in excess of the amount
2-62 authorized by this Subtitle has been received or collected, or
2-63 where such transaction had been entered into or where the parties
2-64 who paid the interest in excess of the amount authorized by this
2-65 Subtitle resided when such transaction occurred, or where he
2-66 resides.
2-67 SECTION 4. This Act takes effect September 1, 1993.
2-68 SECTION 5. (a) This Act does not apply to a loan made
2-69 before the effective date of this Act, made pursuant to a
2-70 commitment entered into before the effective date of this Act, or
3-1 to a renewal, extension, or modification of a loan entered into or
3-2 for which a commitment was entered into before the effective date
3-3 of this Act, and the law in effect when the loan or commitment was
3-4 entered into continues in effect for that purpose.
3-5 (b) Notwithstanding Subsection (a) of this section, a debtor
3-6 and a creditor may agree in writing to be subject to this Act on or
3-7 after the effective date of this Act regarding indebtedness created
3-8 before the effective date of this Act.
3-9 (c) Nothing in this Act shall be construed as implying that
3-10 a late charge imposed before the effective date of this Act or
3-11 subsequent to the effective date of this Act regarding indebtedness
3-12 created before the effective date of this Act is in violation of
3-13 Title 79, Revised Statutes (Article 5069-1.01 et seq., Vernon's
3-14 Texas Civil Statutes).
3-15 SECTION 6. The importance of this legislation and the
3-16 crowded condition of the calendars in both houses create an
3-17 emergency and an imperative public necessity that the
3-18 constitutional rule requiring bills to be read on three several
3-19 days in each house be suspended, and this rule is hereby suspended.
3-20 * * * * *
3-21 Austin,
3-22 Texas
3-23 May 4, 1993
3-24 Hon. Bob Bullock
3-25 President of the Senate
3-26 Sir:
3-27 We, your Committee on Economic Development to which was referred
3-28 S.B. No. 628, have had the same under consideration, and I am
3-29 instructed to report it back to the Senate with the recommendation
3-30 that it do pass, as amended, and be printed.
3-31 Parker,
3-32 Chairman
3-33 * * * * *
3-34 WITNESSES
3-35 FOR AGAINST ON
3-36 ___________________________________________________________________
3-37 Name: Gary Handcox x
3-38 Representing: Tx Commerce Bancshares
3-39 City: Austin
3-40 -------------------------------------------------------------------
3-41 Name: Mark D. Morris x
3-42 Representing: Tx Bankers Assn.
3-43 City: Austin
3-44 -------------------------------------------------------------------
3-45 Name: Rob Norcross x
3-46 Representing: Texas Bankers Assn.
3-47 City: Austin
3-48 -------------------------------------------------------------------
3-49 Name: Pamela Brown x
3-50 Representing: Consumers Union
3-51 City: Austin
3-52 -------------------------------------------------------------------
3-53 Name: Karen Neeley x
3-54 Representing: Ind. Bankers Assn. of Texas
3-55 City: Austin
3-56 -------------------------------------------------------------------