By: Dutton (Senate Sponsor - Wentworth) H.B. No. 2668
(In the Senate - Received from the House May 11, 2005;
May 13, 2005, read first time and referred to Committee on
Jurisprudence; May 21, 2005, reported favorably by the following
vote: Yeas 5, Nays 0; May 21, 2005, sent to printer.)
A BILL TO BE ENTITLED
AN ACT
relating to the performance by a private entity of the functions of
a local child support registry or a child support enforcement
agency and to the receipt, disbursement, and monitoring of child
support payments.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 101.018, Family Code, is amended to read
as follows:
Sec. 101.018. LOCAL REGISTRY. "Local registry" means a
county [an] agency or public entity operated under the authority of
a district clerk, county government, juvenile board, juvenile
probation office, domestic relations office, or other county agency
or public entity that serves a county or a court that has
jurisdiction under this title and that:
(1) receives child support payments;
(2) maintains records of child support payments;
(3) distributes child support payments as required by
law; and
(4) maintains custody of official child support
payment records.
SECTION 2. Section 154.241, Family Code, is amended by
adding Subsection (g) to read as follows:
(g) Notwithstanding any other law, a private entity may
perform the duties and functions of a local registry under this
section either under a contract with a county commissioners court
or domestic relations office executed under Section 204.002 or
under an appointment by a court.
SECTION 3. Section 204.001, Family Code, is amended to read
as follows:
Sec. 204.001. APPLICABILITY. This chapter applies only to a
commissioners court or domestic relations office of a county that
did not have the authority to contract with a private entity to
receive, disburse, and record payments or restitution of child
support on January 1, 1997.
SECTION 4. Section 234.008, Family Code, is amended by
amending Subsection (a) and adding Subsection (d) to read as
follows:
(a) Except as provided by Subsection (c) or (d), not later
than the second business day after the date the state disbursement
unit receives a child support payment, the state disbursement unit
shall distribute the payment to the Title IV-D agency or the
obligee.
(d) The signature of an obligee on a final order in a suit
affecting the parent-child relationship, or another order under
this title, that designates an individual or entity for the purpose
of receiving, disbursing, and monitoring child support payments
constitutes written consent by the obligee to the distribution of
the child support payments by the state disbursement unit to the
designated individual or entity. The state disbursement unit shall
distribute each child support payment to the designated individual
or entity by the date required by Subsection (a). The designated
individual or entity shall deduct any amount of the individual's or
entity's authorized fee from the payment and promptly disburse the
remainder of the amount to the Title IV-D agency or obligee.
SECTION 5. Section 396.001, Finance Code, is amended by
amending Subdivision (1) and adding Subdivisions (1-a), (4-a), (9),
and (10) to read as follows:
(1) "Certified foreign agency" means a foreign agency
that, in lieu of registration, is issued a certificate to operate in
this state under Subchapter D.
(1-a) "Child support enforcement" means an action,
conduct, or practice in enforcing, or in soliciting for
enforcement, a child support obligation, including the collection
of an amount owed under a child support obligation.
(4-a) "Local registry" has the meaning assigned by
Section 101.018, Family Code.
(9) "State disbursement unit" has the meaning assigned
by Section 101.0302, Family Code.
(10) "Title IV-D agency" has the meaning assigned by
Section 101.033, Family Code.
SECTION 6. Section 396.052(a), Finance Code, is amended to
read as follows:
(a) The department shall charge each applicant for a
certificate of registration, or renewal of a certificate, a
nonrefundable fee [of $500] for each certificate. The department
shall set each fee in an amount that is reasonable and necessary to
defray the cost of administering this chapter.
SECTION 7. Section 396.053, Finance Code, is amended to
read as follows:
Sec. 396.053. COST OF REGULATION. The department may
charge each registered private child support enforcement agency an
annual fee in an amount that is reasonable and necessary [not to
exceed $500] to defray [cover] the cost of administering and
enforcing this chapter.
SECTION 8. Subchapter C, Finance Code, is amended by adding
Section 396.1011 to read as follows:
Sec. 396.1011. ELIGIBILITY FOR REGISTRATION. (a) In this
section, "principal" means a person who participates in the affairs
of the holder of a certificate of registration under this section or
who exercises supervisory duties, including an owner, officer,
director, partner, trustee, or agent of the registration holder.
(b) A person is not eligible for a certificate of
registration under this chapter if, during the preceding 10 years:
(1) the person or a principal of the person has been
convicted of:
(A) a felony or a crime involving moral turpitude
under the laws of this or another state or the United States;
(B) a crime under the laws of a foreign country
that involves moral turpitude or would be a felony if committed in
the United States; or
(C) an offense under a state or federal law
relating to any state or federal monetary instrument reporting
requirement; or
(2) the person or a principal of the person has been
convicted of an offense under a state or federal law relating to:
(A) drugs, drug trafficking, or money
laundering; or
(B) a reporting requirement of the Bank Secrecy
Act (12 U.S.C. Section 1951 et seq.).
(c) A person is not eligible for a certificate of
registration under this chapter if at any time the person or a
principal of the person has been convicted of:
(1) a felony under Chapter 34, Penal Code, or a similar
provision involving the laundering of money that is the product of
or proceeds from criminal activity under the laws of another state
or the United States; or
(2) a felony violation of 31 U.S.C. Section 5313 or
5324 or a regulation adopted under those sections.
SECTION 9. Section 396.106(a), Finance Code, is amended to
read as follows:
(a) The department shall issue a certificate of
registration and mail the certificate to an eligible [the]
applicant on receipt of:
(1) a completed application;
(2) evidence of financial solvency;
(3) the surety bond or deposit of money required by
Section 396.105; and
(4) the required registration fee.
SECTION 10. Section 396.153, Finance Code, is amended to
read as follows:
Sec. 396.153. NOTIFICATION OF UPDATED INFORMATION OR CHANGE
IN STATUS OF OTHER AUTHORIZATION. Not later than the 30th day after
the date on which the change occurs, a certified foreign [private
child support enforcement] agency [that is issued a certificate to
operate in this state under this subchapter] shall notify the
department of any change in:
(1) the information provided in an application
submitted under Section 396.152; or
(2) the status of the agency's authorization in the
other state.
SECTION 11. Section 396.203, Finance Code, is amended to
read as follows:
Sec. 396.203. CONTRACT FOR SERVICES. (a) A registered
agency and certified foreign agency [authorized to engage in
business under this chapter] shall execute a written contract for
the enforcement of child support for each client of the agency that
is residing in this state.
(b) The contract required under this section must:
(1) be in writing, dated, and signed by both parties to
the contract; [and]
(2) specify its terms in clear language; and
(3) specify that the client:
(A) may cancel the contract for any reason not
later than the seventh day after the date the contract is executed;
and
(B) is entitled to receive a full refund of any
money paid by the client to the agency not later than the 10th day
after the cancellation date.
(c) A contract under this section for the collection of a
child support obligation must specify a sum certain for collection,
which may not exceed:
(1) the amount of the child support obligation owed on
the date the contract is executed, subject to Subsection (d); or
(2) the monthly amount of the obligor's child support
payment multiplied by 36.
(d) If the parties are unable to determine the amount of the
arrearage on the date the contract is executed, the agency shall,
not later than the 30th day after the contract's execution date,
send to the client an addendum to the contract that contains the
arrearage amount and the sum certain for collection. If the agency
does not send the addendum within the deadline prescribed by this
subsection, the contract is voidable at the option of the client
until the date the client receives the addendum.
(e) A contract for the collection of a child support
obligation terminates on the date the agency collects the sum
certain specified in the contract or any addendum to the contract as
provided by Subsection (c).
(f) The contract required under this section must also
contain a provision that allows the client the option to cancel the
contract if the total amount of child support payments collected
from the obligor in any consecutive 12–month period beginning 18
months after the date the contract is executed does not equal the
amount of at least one of the obligor's ordered monthly child
support payments. The client must notify the agency in writing of
the client's intent to cancel under this subsection.
(g) An attempted waiver of the requirements of Subsections
(c)-(e) or the cancellation provisions prescribed by this section
is void.
SECTION 12. Subchapter E, Chapter 396, Finance Code, is
amended by adding Section 396.204 to read as follows:
Sec. 396.204. ANNUAL REPORT. Not later than September 1 of
each year, each registered agency shall provide to the department a
detailed report accounting for all child support collections made
by the agency during the preceding calendar year. The report, at a
minimum, must contain a statement of the amount of child support
collected on behalf of, and disbursed to, each client, including:
(1) the date on which the amount of child support was
collected; and
(2) the date on which each amount of child support due
the client by the obligor was paid to the client.
SECTION 13. Subchapter F, Chapter 396, Finance Code, is
amended by adding Sections 396.253 and 396.254 to read as follows:
Sec. 396.253. FEE OR OTHER CONSIDERATION RECEIVED BY
AGENCY. (a) For child support enforcement, a registered agency or
certified foreign agency may not receive a fee or other
consideration that exceeds 20 percent of the total amount of the
child support obligation collected by the agency from the obligor.
(b) A registered agency or certified foreign agency may not
receive a fee or other consideration for any child support payment
that:
(1) is collected or received solely through the
efforts of the Title IV-D agency, the state disbursement unit, a
local registry, or another state or local governmental entity or
agency; or
(2) is collected by another registered agency or
certified foreign agency.
(c) Subsection (b) does not preclude a registered agency or
certified foreign agency from receiving a fee or other
consideration for any increase in a child support payment that
results directly from the efforts of the agency, regardless of
whether the payment was initially collected or received through the
efforts of the Title IV-D agency, the state disbursement unit, a
local registry, or another public or private entity or agency.
(d) A person who violates Subsection (a) or (b) commits an
offense. An offense under this section is a Class B misdemeanor.
Sec. 396.254. REDIRECTION OF CHILD SUPPORT PAYMENTS OR
ARREARAGES PROHIBITED. No child support payment or arrearage
collected or received by the Title IV-D agency, the state
disbursement unit, or a local registry may be redirected to any
private child support enforcement agency.
SECTION 14. Section 396.301(a), Finance Code, is amended to
read as follows:
(a) After notice and hearing, the department may revoke the
registration of a registered agency that:
(1) fails to comply with this chapter or a rule adopted
under this chapter;
(2) does not pay a fee or other charge imposed by the
department under this chapter; [and]
(3) fails to maintain and produce at the request of the
department records attesting to the financial solvency of the
registered agency or other business records concerning client
accounts; or
(4) violates a prohibition established by Section
396.1011.
SECTION 15. Subchapter H, Chapter 396, Finance Code, is
amended by adding Section 396.354 to read as follows:
Sec. 396.354. VOIDABLE CONTRACT. (a) A contract that does
not contain the information required by Section 396.203(c) or
cancellation provisions prescribed by Section 396.203(b)(3), (e),
or (f) is voidable at the option of the client. The client is
entitled to recover any amount the registered agency or certified
foreign agency received as compensation in connection with the
contract.
(b) A person who prevails in an action to enforce the
person's rights under this section is entitled to recover court
costs and reasonable attorney's fees.
SECTION 16. Sections 396.203(b)(3) and (c)-(f), 396.253,
and 396.354, Finance Code, as added by this Act, apply only to a
contract that is entered into on or after the effective date of this
Act.
SECTION 17. 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.
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