80R10913 CLG-D

By: Herrero H.B. No. 285

Substitute the following for H.B. No. 285:

By: Herrero C.S.H.B. No. 285

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 180 days or more;

(3) incurred the obligation before the date the individual was ordered to active duty; and

(4) because of the individual's military service, is earning at least 10 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.

(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 regardless of whether any of the documents described by this subsection have been filed with the court 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) be made subject to accrual of interest on any portion of the obligation;

(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, 2007.