79R9915 MCK-D

By:  Shapleigh                                                    S.B. No. 1736



A BILL TO BE ENTITLED

AN ACT

relating to the maximum interest rate charged on debts of certain 
members of the Texas National Guard and armed forces of the United 
States.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Chapter 339, Finance Code, is amended by adding 
Section 339.006 to read as follows:
	Sec. 339.006.  MAXIMUM RATE OF INTEREST ON DEBTS OF CERTAIN 
MILITARY PERSONNEL.  (a)  In this section, "interest" includes a 
service charge, renewal charge, fee, or any other charge, except a 
charge for bona fide insurance, with respect to an obligation or 
liability.
	(b)  This section applies only to a person who is a member of 
the armed forces of the United States on active duty or a member of 
the Texas National Guard who is called to federal active duty.
	(c)  An obligation or liability bearing interest at a rate in 
excess of six percent a year that is incurred by a person, or the 
person and the person's spouse jointly, before the person enters 
active duty may not bear interest at a rate in excess of six percent 
a year during the period the person is on active duty.
	(d)  Interest at a rate in excess of six percent a year that 
would otherwise be incurred but for Subsection (c) is forgiven.
	(e)  The amount of any periodic payment due from a person 
under the terms of the instrument that created an obligation or 
liability covered by this section shall be reduced by the amount of 
the interest forgiven under Subsection (d) that is allocable to the 
period for which the payment is made.
	(f)  For an obligation or liability of a person to be subject 
to the interest rate limitation in Subsection (c), the person shall 
provide to the creditor written notice and a copy of the military 
orders calling the person to active duty and any orders further 
extending active duty, not later than the 180th day after the date 
of the person's termination or release from active duty.
	(g)  On receipt of written notice and a copy of orders 
calling a person to active duty, the creditor shall treat the debt 
in accordance with Subsection (c), beginning on the date on which 
the person is called to active duty.
	(h)  A court may grant a creditor relief from the limitations 
of this section if, in the opinion of the court, the ability of the 
person to pay interest on the obligation or liability at a rate in 
excess of six percent a year is not materially affected by reason of 
the person's military service.
	SECTION 2.  This Act takes effect September 1, 2005.