BWM S.B. 1781 75(R)BILL ANALYSIS FINANCIAL INSTITUTIONS S.B. 1781 By: Ellis (Gutierrez) 5-14-97 Committee Report (Amended) BACKGROUND Currently, Texas law limits delinquency charges on retail credit accounts to $10. Texas limits on delinquency charges puts Texas retailers at a significant disadvantage as they compete against out-ofstate retailers. This bill would provide that delinquency charges not exceed $20. PURPOSE S.B. 1781 limits delinquency charges in retail charge agreements to $20. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Title 79, Article 5069-6.03, V.T.C.S., to prohibit a delinquency charge on an installment in default for a period of more than 21 days from exceeding $20, rather than $10. SECTION 2. Emergency clause. Effective date: upon passage. EXPLANATION OF AMENDMENTS Committee Amendment #1: Committee Amendment #1 provides that the Consumer Credit Commissioner may accept contributions from Texas based retailers and is to use these funds to improve secondary education on consumer credit management as a preventative measure, and to support voluntary consumer credit counseling services. Additionally, credit grantors assessing late charges in excess of the $10 currently permissible must financially support credit counseling institutions. The amendment also specifies that any retail credit grantor which increases its delinquency charge as provided for in this bill and subsequently moves its credit operation out of state, would be required to pay an exit fee to the Consumer Credit Commissioner. This exit fee would be equal to $.25 for each delinquency charge collected during the year prior to the move. Committee Amendment #2: Committee Amendment #2 changes the default period after which a delinquency charge may be assessed from 35 to 21 days.