By Grusendorf                                         H.B. No. 2876
         77R7519 DWS-F                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to delinquency charges in connection with certain loans.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Section 302.001, Finance Code, is amended by
 1-5     adding Subsection (d) to read as follows:
 1-6           (d)  In addition to interest authorized by Subsection (b), a
 1-7     loan providing for a rate of interest that is 10 percent a year or
 1-8     less may provide for a delinquency charge on the amount of any
 1-9     payment in default for a period of not less than 10 days in an
1-10     amount not to exceed the greater of five percent of the amount of
1-11     the payment or $7.50. The charging of the delinquency charge does
1-12     not make the loan subject to Chapter 342 or any other provision of
1-13     Subtitle B.
1-14           SECTION 2.  Section 342.004, Finance Code, is amended by
1-15     adding Subsection (c) to read as follows:
1-16           (c)  A loan described by Section 302.001(d) may provide for a
1-17     delinquency charge as provided by that section without being
1-18     subject to this chapter or any other provision of this subtitle.
1-19           SECTION 3.  Section 342.005, Finance Code, is amended to read
1-20     as follows:
1-21           Sec. 342.005.  APPLICABILITY OF CHAPTER.  Except as provided
1-22     by Sections 302.001(d) and 342.004(c), a [A] loan is subject to
1-23     this chapter if the loan:
1-24                 (1)  provides for interest in excess of 10 percent a
 2-1     year;
 2-2                 (2)  is extended primarily for personal, family, or
 2-3     household use;
 2-4                 (3)  is made by a person engaged in the business of
 2-5     making, arranging, or negotiating those types of loans; and
 2-6                 (4)  either:
 2-7                       (A)  is not secured by a lien on real property;
 2-8     or
 2-9                       (B)  is described by Section 342.001(3), 342.301,
2-10     or 342.456 and is predominantly payable in monthly installments.
2-11           SECTION 4.  This Act takes effect immediately if it receives
2-12     a vote of two-thirds of all the members elected to each house, as
2-13     provided by Section 39, Article III, Texas Constitution.  If this
2-14     Act does not receive the vote necessary for immediate effect, this
2-15     Act takes effect September 1, 2001.