By: Harris S.B. No. 1966
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to debt cancellation agreements offered in connection with
  motor vehicle retail installment contracts.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 348.001, Finance Code, is amended by
  adding Subdivision (1-a) to read as follows:
               (1-a)  "Debt cancellation agreement" means a retail
  installment contract term or a contractual arrangement modifying a
  retail installment contract term under which a retail seller or
  holder agrees to cancel all or part of an obligation of the retail
  buyer to repay an extension of credit from the retail seller or
  holder upon the occurrence of a total loss or theft of the motor
  vehicle and does not include an offer to pay a specified amount on
  the total loss or theft.
         SECTION 2.  Section 348.005, Finance Code, is amended to
  read as follows:
         Sec. 348.005.  ITEMIZED CHARGE.  An amount in a retail
  installment contract is an itemized charge if the amount is not
  included in the cash price and is the amount of:
               (1)  fees for registration, certificate of title, and
  license and any additional registration fees charged by a full
  service deputy under Section 502.114, Transportation Code;
               (2)  any taxes;
               (3)  fees or charges prescribed by law and connected
  with the sale or inspection of the motor vehicle; and
               (4)  charges authorized for insurance, service
  contracts, [or] warranties, or a debt cancellation agreement by
  Subchapter C.
         SECTION 3.  Subchapter B, Chapter 348, Finance Code, is
  amended by adding Section 348.124 to read as follows:
         Sec. 348.124.  DEBT CANCELLATION AGREEMENTS.  (a)  In
  connection with a retail installment transaction under this
  chapter, a retail seller may offer to the retail buyer a debt
  cancellation agreement.  The retail seller may not require that the
  purchase of a debt cancellation agreement by the retail buyer be
  made in order to enter into a retail installment transaction.
         (b)  A debt cancellation agreement may not be considered an
  insurance product.
         (c)  The amount charged for a debt cancellation agreement in
  a retail installment contract must be reasonable.
         (d)  In addition to other disclosures required by state or
  federal law, the retail seller shall provide to the retail buyer a
  notice separate from the retail installment contract stating that
  the buyer is not required to accept or provide the debt cancellation
  agreement in order to purchase the vehicle under a retail
  installment contract.
         SECTION 4.  Subsections (b) and (c), Section 348.208,
  Finance Code, are amended to read as follows:
         (b)  A retail installment contract may include as a separate
  charge an amount for:
               (1)  motor vehicle property damage or bodily injury
  liability insurance;
               (2)  mechanical breakdown insurance;
               (3)  participation in a motor vehicle theft protection
  plan;
               (4)  insurance to reimburse the retail buyer for the
  amount computed by subtracting the proceeds of the buyer's basic
  collision policy on the motor vehicle from the amount owed on the
  vehicle if the vehicle has been rendered a total loss; [or]
               (5)  a warranty or service contract relating to the
  motor vehicle; or
               (6)  a debt cancellation agreement if the agreement is
  included as a term of a retail installment contract under Section
  348.124.
         (c)  Notwithstanding any other law, service contracts and
  debt cancellation agreements sold by a retail seller of a motor
  vehicle to a retail buyer are not subject to Chapter 101 or 226,
  Insurance Code.
         SECTION 5.  This Act takes effect September 1, 2009.