By: Eltife S.B. No. 884

(In the Senate - Filed February 26, 2007; March 7, 2007, read first time and referred to Committee on Business and Commerce; March 26, 2007, reported adversely, with favorable Committee Substitute by the following vote: Yeas 9, Nays 0; March 26, 2007, sent to printer.)

COMMITTEE SUBSTITUTE FOR S.B. No. 884 By: Averitt

A BILL TO BE ENTITLED

AN ACT

relating to the regulation of consumer debt management services.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subsection (c), Section 394.204, Finance Code, is amended to read as follows:

(c) An application for an initial registration must be in a form prescribed by the commissioner and accompanied by:

(1) the appropriate fees set by the finance commission in an amount necessary to recover the costs of administering this subchapter;

(2) the surety bond or insurance required by Section 394.206;

(3) the applicant's name, the applicant's principal business address and telephone number, all other business addresses of the applicant in this state, and the applicant's electronic mail address and Internet website address;

(4) all names under which the applicant conducts business;

(5) the address of each location in this state at which the applicant will provide debt management services, or if the applicant will have no such location, a statement to that effect;

(6) the name and home address of each officer and director of the applicant and each person that holds at least a 10 percent ownership interest in the applicant;

(7) if the applicant is a nonprofit or tax exempt organization, a detailed description of the ownership interest of each officer, director, agent, or employee of the applicant, and any member of the immediate family of an officer, director, agent, or employee of the applicant, in a for-profit affiliate or subsidiary of the applicant or in any other for-profit business entity that provides services to the applicant or to a consumer in relation to the applicant's debt management business; and

(8) [(4)] any other information that the commissioner requires.

SECTION 2. Subsection (b), Section 394.205, Finance Code, is amended to read as follows:

(b) Each provider shall file a report with the commissioner at each renewal of the provider's registration. The report must at a minimum disclose in detail and under appropriate headings:

(1) the assets and liabilities of the provider at the beginning and end of the period, if the provider is a nonprofit or tax exempt organization;

(2) the total number of debt management plans the provider has initiated on behalf of consumers in this state during that year; and

(3) records of total and average fees charged to consumers, including all voluntary contributions received from consumers.

SECTION 3. Subsections (a) and (d), Section 394.208, Finance Code, are amended to read as follows:

(a) A provider may not enroll a consumer in a debt management plan unless,[:

[(1) the provider is a nonprofit organization exempt from taxation under Section 501(c)(3), Internal Revenue Code of 1986; and

[(2)] through the services of a counselor certified by an independent accreditation organization, the provider has:

(1) [(A)] provided the consumer individualized counseling and educational information that at a minimum addresses the topics of managing household finances, managing credit and debt, and budgeting;

(2) [(B)] prepared an individualized financial analysis and an initial debt management plan for the consumer's debts with specific recommendations regarding actions the consumer should take;

(3) [(C)] determined that the consumer has a reasonable ability to make payments under the proposed debt management plan based on the information provided by the consumer;

(4) [(D)] a reasonable expectation, provided that the consumer has provided accurate information to the provider, that each creditor of the consumer listed as a participating creditor in the plan will accept payment of the consumer's debts as provided in the initial plan;

(5) [(E)] prepared, for all creditors identified by the consumer or identified through additional investigation by the provider, a list, which must be provided to the consumer in a form the consumer may keep, of the creditors that the provider reasonably expects to participate in the plan; and

(6) [(F)] provided a written document to the consumer in a form the consumer may keep that clearly and conspicuously contains the following statements:

(A) [(i)] that debt management services are not suitable for all consumers and that consumers may request information about other ways, including bankruptcy, to deal with indebtedness;

(B) [(ii)] that if the provider is a nonprofit or tax-exempt organization the provider cannot require donations or contributions; and

(C) if applicable, [(iii)] that some of the provider's funding comes from contributions from creditors who participate in debt management plans, except that a provider may substitute for "some" the actual percentage of creditor contributions it received during the most recent reporting period.

(d) A provider may provide the information required by Subsections (a)(2), (5), and (6) [(a)(2)(B), (E), and (F)] through its Internet website if the provider:

(1) has complied with the federal Electronic Signatures in Global and National Commerce Act (15 U.S.C. Section 7001 et seq.);

(2) informs the consumer that, on electronic, telephonic, or written request the provider will make available to the consumer a paper copy or copies; and

(3) discloses on its Internet website:

(A) the provider's name and each name under which it does business;

(B) the provider's principal business address and telephone number; and

(C) the names of the provider's principal officers.

SECTION 4. Section 394.210, Finance Code, is amended by adding Subsection (f) to read as follows:

(f) The finance commission may establish maximum fair and reasonable fees under this section.

SECTION 5. This Act takes effect September 1, 2007.

* * * * *