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A BILL TO BE ENTITLED
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AN ACT
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relating to the regulation of debt management service providers and |
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a study regarding the business of consumer debt settlement. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 394.202(6), Finance Code, is amended to |
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read as follows: |
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(6) "Debt management service" means service as an |
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intermediary between an individual and one or more creditors of the |
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individual for the purpose of obtaining concessions. The term does |
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not include: |
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(A) legal services provided in an |
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attorney-client relationship by an attorney licensed or otherwise |
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authorized to practice law in this state [the receiving of money
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from a consumer for the purpose of distributing that money to or
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among one or more of the creditors of the consumer in full or
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partial payment of the consumer's obligations]; |
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(B) accounting services provided in an |
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accountant-client relationship by a certified public accountant |
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licensed to provide accounting services in this state [arranging or
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assisting a consumer to arrange for the distribution of one or more
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payments to or among one or more creditors of the consumer in full
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or partial payment of the consumer's obligations]; or |
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(C) financial planning services provided in a |
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financial planner-client relationship by a member of a financial |
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planning profession whose members the finance commission by rule |
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determines are: |
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(i) licensed by this state; |
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(ii) subject to a disciplinary mechanism; |
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(iii) subject to a code of professional |
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responsibility; and |
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(iv) subject to a continuing education |
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requirement [exercising control, directly or indirectly, or
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arranging for the exercise of control over funds of a consumer for
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the purpose of distributing payments to or among one or more
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creditors of the consumer in full or partial payment of the
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consumer's obligations]. |
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SECTION 2. Sections 394.203(a) and (c), Finance Code, are |
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amended to read as follows: |
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(a) This subchapter does not apply to a provider who |
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receives no compensation for debt management services from or on |
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behalf of the individuals to whom it provides the services or from |
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their creditors [Except as otherwise provided by this subchapter,
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this subchapter applies to a provider regardless of whether the
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provider charges a fee or receives consideration for a service]. |
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(c) This subchapter does not apply to: |
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(1) [an attorney licensed to practice in this state,
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unless the attorney holds the attorney's self out to the public as a
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provider or is employed, affiliated with, or otherwise working on
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behalf of a provider;
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[(2)] a title insurance or abstract company employee |
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or agent, or other person legally authorized to engage in escrow |
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business in the state, only while engaged in the escrow business; |
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(2) [(3)] a judicial officer or person acting under a |
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court order; |
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(3) [(4)] a person who has legal authority under |
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federal or state law to act as a representative payee for a |
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consumer, only to the extent the person is paying bills or other |
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debts on behalf of that consumer; |
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(4) [(5)] a person who pays bills or other debts owed |
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by a consumer and on behalf of a consumer, if the money used to make |
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the payments belongs exclusively to the consumer and the person |
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does not initiate any contact with individual creditors of the |
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consumer to compromise a debt, arrange a new payment schedule, or |
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otherwise change the terms of the debt; or |
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(5) [(6)] a financial institution, as defined by |
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Section 201.101. |
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SECTION 3. Section 394.214, Finance Code, is amended by |
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adding Subsection (a-1) to read as follows: |
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(a-1) The finance commission may adopt rules to require |
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persons providing debt settlement services to register and to |
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provide information to the commissioner regarding consumer |
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disclosures. |
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SECTION 4. Subchapter C, Chapter 394, Finance Code, is |
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amended by adding Section 394.216 to read as follows: |
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Sec. 394.216. STUDY REGARDING CONSUMER DEBT SETTLEMENT |
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INDUSTRY. (a) The consumer debt settlement task force is created |
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to conduct a study regarding the business of consumer debt |
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settlement. The study must examine: |
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(1) the disclosures provided to consumers who enroll |
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in debt settlement programs, including disclosures regarding: |
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(A) consumers' rights and responsibilities under |
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those programs, including the benefits of using a savings program |
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or other financial planning opportunities; |
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(B) the amount of the debt or obligation of the |
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consumer to be settled under those programs and the fees or other |
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charges imposed by persons providing debt settlement services; and |
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(C) the refund policies of those programs; |
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(2) the effectiveness of debt settlement programs in |
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assisting consumers; |
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(3) the cost and availability of debt settlement |
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programs; |
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(4) any information regarding complaints and |
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enforcement actions against debt settlement programs; and |
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(5) other appropriate issues. |
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(b) The task force consists of: |
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(1) the attorney general or the attorney general's |
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designee; |
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(2) the consumer credit commissioner or the |
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commissioner's designee; |
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(3) a member of the house of representatives appointed |
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by the speaker of the house of representatives; |
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(4) a member of the senate appointed by the lieutenant |
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governor; |
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(5) three persons who provide debt settlement |
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services, appointed by the attorney general; and |
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(6) three consumer advocates, appointed by the |
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attorney general. |
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(c) Not later than December 1, 2010, the task force shall |
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submit to the legislature a report on the results of the study |
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required under this section. |
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(d) This section expires September 1, 2011. |
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SECTION 5. (a) Except as provided by Subsection (b) of this |
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section, this Act takes effect January 1, 2010. |
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(b) Section 4 of this Act takes effect September 1, 2009. |