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A BILL TO BE ENTITLED
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AN ACT
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relating to the repayment of certain extensions of consumer credit |
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facilitated by a credit access business. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter C-1, Chapter 393, Finance Code, is |
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amended by adding Sections 393.225 and 393.226 to read as follows: |
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Sec. 393.225. EXTENDED PAYMENT PLAN. (a) A credit access |
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business may obtain for a consumer or assist a consumer in obtaining |
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an extended payment plan for an extension of consumer credit in the |
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form of a deferred presentment transaction or motor vehicle title |
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loan that the credit access business obtained for the consumer or |
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assisted the consumer in obtaining. |
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(b) A consumer is eligible for an extended payment plan |
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under this section if: |
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(1) the consumer has not entered into an extended |
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payment plan with the credit access business during the preceding |
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12 months; |
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(2) the extension of consumer credit has been |
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refinanced four times; and |
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(3) the extended payment plan was requested before the |
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debt was due. |
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(c) An extended payment plan must: |
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(1) be in writing; |
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(2) be signed by the credit access business and the |
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consumer; and |
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(3) describe the terms of the plan. |
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(d) The credit access business may not charge the consumer |
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fees or other charges in connection with the making of payments of |
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principal or other amounts owed under an extended payment plan. |
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(e) An extended payment plan must provide for four equal or |
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nearly equal payments of principal and interest, with all principal |
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and interest to be paid in full in the fourth payment. The consumer |
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may prepay the debt without penalty at any time. |
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(f) During the period of the extended payment plan: |
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(1) the credit access business may not obtain for the |
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consumer or assist the consumer in obtaining an additional |
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extension of consumer credit; and |
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(2) a person may not engage in debt collection |
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activities for the debt being repaid under the extended payment |
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plan, if the consumer has made timely payments under the plan. |
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Sec. 393.226. PAYMENT SCHEDULES FOR CERTAIN DEFERRED |
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PRESENTMENT TRANSACTIONS. A deferred presentment transaction that |
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a credit access business obtains for a consumer or assists a |
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consumer in obtaining and that is payable in installments must be |
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payable on a fully amortizing, declining principal balance basis, |
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with substantially equal payments to be made as agreed to by the |
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parties to the transaction. If fees are precomputed and the debt is |
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prepaid in full, any unearned fees must be refunded to the consumer. |
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SECTION 2. The heading to Subchapter C-1, Chapter 393, |
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Finance Code, is amended to read as follows: |
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SUBCHAPTER C-1. NOTICE, [AND] DISCLOSURE, AND EXTENSION OF CREDIT |
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PROVISION REQUIREMENTS APPLICABLE TO [FOR] CERTAIN CREDIT SERVICES |
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ORGANIZATIONS |
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SECTION 3. Section 393.222(a), Finance Code, is amended to |
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read as follows: |
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(a) A credit access business shall post, in a conspicuous |
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location in an area of the business accessible to consumers and on |
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any Internet website, including a social media site, maintained by |
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the credit access business: |
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(1) a schedule of all fees to be charged for services |
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performed by the credit access business in connection with deferred |
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presentment transactions and motor vehicle title loans, as |
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applicable; |
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(2) a notice of the name and address of the Office of |
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Consumer Credit Commissioner and the telephone number of the |
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office's consumer helpline; |
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(3) a notice of the right to enter into an extended |
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payment plan; and |
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(4) [(3)] a notice that reads as follows: |
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"An advance of money obtained through a payday loan or auto |
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title loan is not intended to meet long-term financial needs. A |
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payday loan or auto title loan should only be used to meet immediate |
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short-term cash needs. Refinancing the loan rather than paying the |
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debt in full when due will require the payment of additional |
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charges." |
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SECTION 4. Section 393.223(a), Finance Code, is amended to |
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read as follows: |
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(a) Before performing services described by Section |
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393.221(1), a credit access business must provide to a consumer a |
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disclosure adopted by rule of the Finance Commission of Texas that |
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discloses the following in a form prescribed by the commission: |
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(1) the interest, fees, and annual percentage rates, |
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as applicable, to be charged on a deferred presentment transaction |
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or on a motor vehicle title loan, as applicable, in comparison to |
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interest, fees, and annual percentage rates to be charged on other |
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alternative forms of consumer debt; |
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(2) the amount of accumulated fees a consumer would |
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incur by renewing or refinancing a deferred presentment transaction |
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or motor vehicle title loan that remains outstanding for a period of |
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two weeks, one month, two months, and three months; [and] |
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(3) information regarding the typical pattern of |
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repayment of deferred presentment transactions and motor vehicle |
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title loans; and |
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(4) the right to enter into an extended payment plan. |
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SECTION 5. Section 393.226, Finance Code, as added by this |
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Act, applies only to an extension of consumer credit made on or |
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after the effective date of this Act. An extension of consumer |
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credit made before the effective date of this Act is governed by the |
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law in effect on the date the extension of consumer credit was made, |
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and the former law is continued in effect for that purpose. |
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SECTION 6. This Act takes effect September 1, 2013. |