79(R) HB 1853 - House Committee Report version


                                                                                
79R14687 CLG-D


By:  Herrero, Corte, Noriega, Leibowitz,                          H.B. No. 1853
 
    et al.                                                                   

Substitute the following for H.B. No. 1853:                                   

By:  Herrero                                                  C.S.H.B. No. 1853



A BILL TO BE ENTITLED

AN ACT

relating to a consumer debt owed by certain military personnel 
called to active duty.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Chapter 392, Finance Code, is amended by adding 
Subchapter F to read as follows:

SUBCHAPTER F.  DEFERRED COLLECTION OF CONSUMER DEBT
	Sec. 392.501.  DEFERRED COLLECTION OF DEBT OWED BY CERTAIN 
MILITARY PERSONNEL CALLED TO ACTIVE DUTY.  (a)  An individual is 
entitled to defer collection of a consumer debt or abate a suit to 
collect a consumer debt if the individual:
		(1)  is a member of:                                                   
			(A)  the state military forces, as defined by 
Section 431.001, Government Code; or
			(B)  a reserve component of the armed forces of 
the United States;  
		(2)  is ordered to active duty for a period of 30 days 
or more;      
		(3)  incurred the obligation before the date the 
individual became aware that the individual's unit was being 
ordered to active duty; and
		(4)  because of the individual's military service, is 
earning at least 15 percent less income than on the date the debt 
was incurred and, as a result of this loss of income, is unable to 
pay the debt.
	(b)  To obtain a deferral, an individual must send to the 
creditor or debt collector:
		(1)  an affidavit stating the facts required to be 
established by Subsection (a);
		(2)  a copy of a valid military identification card; 
and             
		(3)  a copy of the orders calling the individual to 
active duty.     
	(c)  Not later than the fourth day after the date the 
individual seeking the deferral sends the affidavit and other 
documents required for the deferral under Subsection (b) or the 
date the creditor or debt collector receives those documents, 
whichever occurs first, the creditor or debt collector shall cease 
any collection efforts and may not resume those efforts or file suit 
to collect the consumer debt until the 91st day after the date the 
individual is no longer on active duty.  Sending an account 
statement or other periodic statement relating to the account that 
is normally sent in the ordinary course of the creditor's or debt 
collector's business shall not be considered a demand for payment 
or other collection effort under this subsection.
	(d)  To obtain an abatement of a pending suit to collect a 
consumer debt of an individual, an affidavit of the individual or, 
if authorized by the individual, an affidavit of any spouse, 
parent, sibling, or adult child of the individual stating the facts 
required to be established by Subsection (a) and the documents 
described by Subsections (b)(2) and (3) must be filed in the court 
in which the suit is pending.  On the filing of the affidavit and 
other documents described by this subsection, the court shall abate 
the suit until the 91st day after the date the individual no longer 
is on active duty.  The court shall also abate the suit for the same 
period prescribed by this subsection if, after a hearing, the court 
finds the individual is entitled to the deferral.  The clerk of the 
court shall deliver a copy of the order abating the suit to the 
creditor and any applicable debt collector.
	(e)  From the date the creditor or debt collector is required 
to cease collection efforts under Subsection (c) or the date the 
court abates a suit under Subsection (d), whichever occurs first, 
an individual entitled to receive a deferral under this section 
shall not, during the period of deferral or abatement:
		(1)  be considered to be in default of the obligation;                 
		(2)  accrue on any portion of the obligation interest 
at a rate that exceeds the lesser of:
			(A)  six percent a year; or                                           
			(B)  the creditor's quarterly average cost of 
funds on the date the affidavit or other documents seeking the 
deferral or abatement are sent or filed in accordance with this 
section;
		(3)  be subject to a demand for payment of or 
acceleration of the remaining payments of the obligation;
		(4)  be subject to any increase in the periodic payment 
amount of the obligation; or
		(5)  at any time be penalized in any other manner by the 
creditor or debt collector because of the deferral.
	(f)  Notwithstanding the other provisions of this section, 
if a married individual who qualifies for a deferral or abatement of 
collection of debt as provided by this section dies, the deferral or 
abatement continues in effect until the earlier of:
		(1)  the 91st day after the date of the individual's 
death; or       
		(2)  the date the surviving spouse of the individual 
remarries.      
	Sec. 392.502.  EXERCISE OF RIGHTS UNDER SUBCHAPTER NOT TO 
AFFECT CERTAIN FUTURE TRANSACTIONS.  Receipt by an individual of a 
deferral or abatement of collection of a consumer debt as provided 
by this subchapter shall not provide the sole basis for:
		(1)  a denial or revocation of an extension of credit by 
a creditor, debt collector, or other person;
		(2)  a change by a creditor or debt collector in the 
terms of an existing credit arrangement without the individual's 
prior consent;
		(3)  a refusal by a creditor or debt collector to extend 
future credit to the individual in substantially the amount or on 
substantially the terms requested;
		(4)  an adverse report relating to the creditworthiness 
of the individual by or to a credit bureau; or
		(5)  an annotation in the individual's file by a credit 
bureau identifying the individual as a member of the state military 
forces or a reserve component of the armed forces of the United 
States.
	Sec. 392.503.  WAIVER OF RIGHT VOID.  A provision of a 
contract or other agreement that purports to be a waiver by an 
individual of any right provided by this subchapter is contrary to 
public policy and void.
	Sec. 392.504.  TOLLING OF STATUTE OF LIMITATIONS.  The 
period of an individual's military service may not be included in 
computing any period limited by the law for the bringing of any 
action or proceeding under this subchapter.
	SECTION 2.  Subchapter F, Chapter 392, Finance Code, as 
added by this Act, applies only to a member of the state military 
forces or a reserve component of the armed forces of the United 
States who is ordered to report for or is serving on active duty on 
or after the effective date of this Act.
	SECTION 3.  This Act takes effect immediately if it receives 
a vote of two-thirds of all the members elected to each house, as 
provided by Section 39, Article III, Texas Constitution.  If this 
Act does not receive the vote necessary for immediate effect, this 
Act takes effect September 1, 2005.