BILL ANALYSIS


                                                        H.B. 2674
                                            By: Hunter, T. (Cain)
                                             Economic Development
                                                         05-17-95
                              Senate Committee Report (Unamended)
BACKGROUND

Article 5069-1.03, V.T.C.S. (Consumer Credit Code), establishes the
rate of interest applicable to a contract when no specified rate of
interest is agreed upon by the parties to the agreement. It also
prohibits the charging of interest until 30 days after the sum is
due and payable, which makes it the only provision in the Consumer
Credit Code that provides a statutory interest-free window after
the debt is due. Because of conflicts with standard business
practice, which begins charging interest on the day payment is due,
a problem arises when Article 5069-1.03 is applied to open
accounts.

PURPOSE

As proposed, H.B. 2674 provides that a person has no civil
liability to an obligor and no criminal liability for a violation
of Subtitle 1 resulting solely from contracting for, charging, or
receiving the interest provided in Article 5069-1.03, V.T.C.S.,
prior to 30 days after the debt is due and payable.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section (4), Article 5069-1.06, V.T.C.S., by
adding Subsection (D), to provide that a person has no civil
liability to an obligor and no criminal liability for a violation
of Subtitle 1 resulting solely from contracting for, charging, or
receiving the interest provided in Article 1.03 of Subtitle 1 prior
to 30 days after the debt is due and payable.

SECTION 2. Emergency clause.
           Effective date: upon passage.