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A BILL TO BE ENTITLED
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AN ACT
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relating to the collection of consumer debt by debt buyers. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. This Act shall be known as the Fair Consumer Debt |
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Collection Act. |
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SECTION 2. Title 5, Finance Code, is amended by adding |
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Chapter 397 to read as follows: |
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CHAPTER 397. COLLECTION OF CONSUMER DEBT BY DEBT BUYERS |
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Sec. 397.001. DEFINITIONS. In this chapter: |
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(1) "Charged-off debt" means a consumer debt that a |
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creditor has determined to be a loss or expense to the creditor |
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instead of an asset. |
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(2) "Consumer," "consumer debt," and "creditor" have |
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the meanings assigned by Section 392.001. |
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(3) "Debt buyer" means a person who purchases or |
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otherwise acquires a consumer debt from a creditor or other |
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subsequent owner of the consumer debt, regardless of whether the |
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person collects the consumer debt, hires a third party to collect |
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the consumer debt, or hires an attorney for collection litigation |
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in connection with the consumer debt. The term does not include: |
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(A) a person who acquires a charged-off debt |
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incidental to the purchase of a portfolio that predominantly |
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consists of consumer debt that has not been charged off; or |
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(B) a check services company that acquires the |
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right to collect on a paper or electronic negotiable instrument, |
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including an Automated Clearing House (ACH) authorization to debit |
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an account that has not been processed. |
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(4) "Statute of limitations" means a law in this state |
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that prescribes the period during which a person may bring a cause |
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of action. |
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Sec. 397.002. CONFLICT OF LAW. Unless otherwise expressly |
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provided, this chapter prevails to the extent of any conflict |
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between this chapter and any other law of this state. |
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Sec. 397.003. LIMITATION ON INITIATION OF CONTACT WITH |
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CONSUMER. A debt buyer may not contact or attempt to contact a |
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consumer for purposes of debt collection if the debt buyer knows or |
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has reason to know that a cause of action for collection of the |
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consumer debt is barred by a statute of limitations. |
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Sec. 397.004. INITIATION OF ACTION AGAINST OR ARBITRATION |
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WITH CONSUMER. (a) A debt buyer may not bring an action against, |
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initiate arbitration with, or commence any other legal proceeding |
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against a consumer to collect a consumer debt if the debt buyer |
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knows or has reason to know that a cause of action for collection of |
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the consumer debt is barred by a statute of limitations. |
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(b) A cause of action by a debt buyer against a consumer for |
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collection of a consumer debt that is barred by a statute of |
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limitations may not be revived by the collection of payment on the |
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account of the consumer associated with the debt, an oral or written |
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reaffirmation of the consumer debt, or any other method. |
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Sec. 397.005. CIVIL ACTION. (a) A debt buyer who violates |
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this chapter is liable to a person harmed by the violation for: |
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(1) actual damages; and |
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(2) reasonable attorney's fees and costs. |
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(b) An action must be brought under this section not later |
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than the second anniversary of the date of the last event |
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constituting the alleged violation for which the action is brought. |
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SECTION 3. The changes in law made by this Act apply only to |
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an action of a debt buyer to collect a consumer debt if the action |
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occurs on or after the effective date of this Act. An action of a |
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debt buyer to collect a consumer debt that occurs before the |
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effective date of this Act is governed by the law in effect |
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immediately before that date, and the former law is continued in |
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effect for that purpose. |
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SECTION 4. This Act takes effect September 1, 2017. |