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A BILL TO BE ENTITLED
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AN ACT
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relating to debt cancellation agreements offered in connection with |
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motor vehicle retail installment contracts. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 348.001, Finance Code, is amended by |
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adding Subdivision (1-a) to read as follows: |
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(1-a) "Debt cancellation agreement" means a retail |
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installment contract term or a contractual arrangement modifying a |
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retail installment contract term under which a retail seller or |
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holder agrees to cancel all or part of an obligation of the retail |
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buyer to repay an extension of credit from the retail seller or |
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holder on the occurrence of the total loss or theft of the motor |
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vehicle that is the subject of the retail installment contract but |
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does not include an offer to pay a specified amount on the total |
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loss or theft of the motor vehicle. |
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SECTION 2. Section 348.005, Finance Code, is amended to |
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read as follows: |
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Sec. 348.005. ITEMIZED CHARGE. An amount in a retail |
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installment contract is an itemized charge if the amount is not |
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included in the cash price and is the amount of: |
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(1) fees for registration, certificate of title, and |
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license and any additional registration fees charged by a full |
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service deputy under Section 502.114, Transportation Code; |
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(2) any taxes; |
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(3) fees or charges prescribed by law and connected |
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with the sale or inspection of the motor vehicle; and |
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(4) charges authorized for insurance, service |
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contracts, [or] warranties, or a debt cancellation agreement by |
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Subchapter C. |
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SECTION 3. Subchapter B, Chapter 348, Finance Code, is |
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amended by adding Section 348.124 to read as follows: |
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Sec. 348.124. DEBT CANCELLATION AGREEMENTS. (a) In |
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connection with a retail installment transaction under this |
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chapter, a retail seller may offer to the retail buyer a debt |
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cancellation agreement. The retail seller may not require that the |
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purchase of a debt cancellation agreement by the retail buyer be |
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made in order to enter into a retail installment transaction. |
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(b) A debt cancellation agreement is not considered an |
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insurance product. |
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(c) The amount charged for a debt cancellation agreement |
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made in connection with a retail installment contract must be |
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reasonable. |
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(d) In addition to other disclosures required by state or |
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federal law, the retail seller shall provide to the retail buyer a |
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separate notice in connection with the retail installment contract |
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stating that the retail buyer is not required to accept or provide a |
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debt cancellation agreement in order to purchase the motor vehicle |
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under a retail installment contract. |
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SECTION 4. Sections 348.208(b) and (c), Finance Code, are |
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amended to read as follows: |
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(b) A retail installment contract may include as a separate |
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charge an amount for: |
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(1) motor vehicle property damage or bodily injury |
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liability insurance; |
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(2) mechanical breakdown insurance; |
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(3) participation in a motor vehicle theft protection |
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plan; |
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(4) insurance to reimburse the retail buyer for the |
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amount computed by subtracting the proceeds of the buyer's basic |
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collision policy on the motor vehicle from the amount owed on the |
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vehicle if the vehicle has been rendered a total loss; [or] |
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(5) a warranty or service contract relating to the |
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motor vehicle; or |
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(6) a debt cancellation agreement if the agreement is |
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included as a term of a retail installment contract under Section |
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348.124. |
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(c) Notwithstanding any other law, service contracts and |
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debt cancellation agreements sold by a retail seller of a motor |
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vehicle to a retail buyer are not subject to Chapter 101 or 226, |
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Insurance Code. |
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SECTION 5. This Act takes effect September 1, 2009. |