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.