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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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certain 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 354.001, Finance Code, is amended by |
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adding Subdivision (3-a) to read as follows: |
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(3-a) "Debt cancellation agreement fee" means the |
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amount charged for a debt cancellation agreement made in connection |
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with a contract. |
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SECTION 2. Section 354.002(b), Finance Code, is amended to |
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read as follows: |
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(b) The debt cancellation agreement fee [amount charged for
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a debt cancellation agreement made in connection with a contract] |
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may not exceed five percent of the amount financed pursuant to the |
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contract. Section 348.124(c) does not apply to a debt cancellation |
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agreement regulated under this chapter. |
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SECTION 3. Section 354.004, Finance Code, is amended to |
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read as follows: |
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Sec. 354.004. REQUIRED DEBT CANCELLATION AGREEMENT |
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LANGUAGE. A debt cancellation agreement must state: |
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(1) the contact information of the retail seller, the |
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holder, and any administrator of the debt cancellation agreement; |
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(2) the name and address of the retail buyer; |
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(3) the cost and term of the debt cancellation |
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agreement; |
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(4) the procedure the retail buyer must follow to |
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obtain benefits under the terms of the debt cancellation agreement, |
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including a telephone number and address where the retail buyer may |
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provide notice under the debt cancellation agreement; |
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(5) the period during which the retail buyer is |
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required to notify the retail seller, the holder, or any |
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administrator of the agreement of any potential loss under the debt |
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cancellation agreement for total loss or theft of the covered |
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vehicle; |
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(6) that in order to make a claim, the retail buyer |
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must provide or complete some or all of the following documents and |
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provide those documents to the retail seller, the holder, or any |
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administrator of the agreement: |
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(A) a debt cancellation request form; |
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(B) proof of loss and settlement payment from the |
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retail buyer's primary comprehensive, collision, or uninsured or |
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underinsured motorist policy or other parties' liability insurance |
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policy for the settlement of the insured total loss of the covered |
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vehicle; |
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(C) verification of the retail buyer's primary |
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insurance deductible; |
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(D) a copy of any police report filed in |
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connection with the total loss or theft of the covered vehicle; and |
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(E) a copy of the damage estimate; |
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(7) that documentation not described by Subdivision |
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(6) or required by the retail seller, the holder, or any |
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administrator of the agreement is not required to substantiate the |
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loss or determine the amount of debt to be canceled; |
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(8) that notwithstanding the collection of the |
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documents under Subdivision (6), on reasonable advance notice the |
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retail seller, the holder, or any administrator of the agreement |
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may inspect the retail buyer's covered vehicle; |
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(9) that the retail seller or holder will cancel all or |
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part of the retail buyer's obligation as provided in the debt |
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cancellation agreement on the occurrence of total loss or theft of |
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the covered vehicle; |
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(10) the method to be used to calculate refunds; |
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(11) the method for calculating the amount to be |
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canceled under the debt cancellation agreement on the occurrence of |
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total loss or theft of a covered vehicle; |
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(12) that purchase of a debt cancellation agreement is |
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not required for the retail buyer to obtain an extension of credit |
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and will not be a factor in the credit approval process; |
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(13) that in order to cancel the debt cancellation |
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agreement and receive a refund, the retail buyer must provide a |
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written request to cancel to the retail seller, the holder, or any |
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administrator of the agreement; |
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(14) that if total loss or theft of the covered vehicle |
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has not occurred, the retail buyer has 30 days from the date of the |
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contract or the issuance of the debt cancellation agreement, |
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whichever is later, or a longer period as provided under the debt |
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cancellation agreement, to cancel the debt cancellation agreement |
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and receive a full refund of the debt cancellation agreement fee; |
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(15) that the retail buyer may file a complaint with |
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the commissioner, and include the address, phone number, and |
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Internet website of the Office of Consumer Credit Commissioner; and |
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(16) that the holder will cancel certain amounts under |
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the debt cancellation agreement for total loss or theft of a covered |
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vehicle, in the following or substantially similar language: "YOU |
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WILL CANCEL CERTAIN AMOUNTS I OWE UNDER THIS CONTRACT IN THE CASE OF |
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A TOTAL LOSS OR THEFT OF THE COVERED VEHICLE AS STATED IN THE DEBT |
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CANCELLATION AGREEMENT." |
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SECTION 4. Sections 354.006(a), (b), (f), (g), and (h), |
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Finance Code, are amended to read as follows: |
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(a) If a retail buyer purchases a debt cancellation |
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agreement, the retail seller must provide to the retail buyer a true |
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and correct copy of the debt cancellation agreement not later than |
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the 10th day after the date of the contract. |
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(b) A holder must comply with the terms of a debt |
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cancellation agreement not later than the 60th day after the date of |
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receipt of all necessary information required by the holder or |
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administrator of the debt cancellation agreement to process the |
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request. |
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(f) A retail seller [holder] that offers a debt cancellation |
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agreement must report the sale [of] and forward the debt |
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cancellation agreement fee [money received on all such agreements] |
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to the [any] designated party as prescribed in any applicable debt |
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cancellation agreement [administrative services agreement,
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contractual liability policy, other insurance policy, or other
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specified] program documents. |
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(g) Until the debt cancellation agreement fee has been |
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forwarded to the designated party as prescribed in any applicable |
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debt cancellation agreement program documents, the debt |
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cancellation agreement fee [Money] received or held by a retail |
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seller [holder] or any administrator of a debt cancellation |
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agreement and belonging to an administrator or any insurance |
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company[, holder, or administrator] under the terms of a written |
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agreement must be held by the retail seller [holder] or |
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administrator in a fiduciary capacity. |
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(h) A retail seller that negotiates a debt cancellation |
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agreement and subsequently assigns the contract shall: |
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(1) maintain documents relating to the debt |
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cancellation agreement that come into the retail seller's |
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possession; and |
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(2) on request of the Office of Consumer Credit |
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Commissioner, cooperate in requesting and obtaining access to |
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documents relating to the debt cancellation agreement not in the |
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retail seller's possession. |
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SECTION 5. The heading to Section 354.007, Finance Code, is |
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amended to read as follows: |
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Sec. 354.007. REFUND OR CREDIT FOR DEBT CANCELLATION |
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AGREEMENTS. |
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SECTION 6. Sections 354.007(b), (c), (e), and (g), Finance |
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Code, are amended to read as follows: |
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(b) The refund or credit for the debt cancellation agreement |
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fee can be rounded to the nearest whole dollar. A refund or credit |
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of the debt cancellation agreement fee is not required if the amount |
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of the refund or credit calculated is less than $5. |
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(c) If total loss or theft has not occurred, the retail |
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buyer may cancel the debt cancellation agreement not later than the |
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30th day after the date of the contract or the issuance of the debt |
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cancellation agreement, whichever is later, or a later date as |
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provided under the debt cancellation agreement. On cancellation of |
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the debt cancellation agreement, the recipient of the debt |
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cancellation agreement fee [holder or any administrator of the
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agreement] shall refund the entire debt cancellation agreement fee |
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or forward to the holder the entire debt cancellation agreement fee |
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to be applied as a credit under the contract [the entire debt
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cancellation agreement fee]. A retail buyer may not cancel the debt |
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cancellation agreement and subsequently receive any benefits under |
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the debt cancellation agreement. |
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(e) If the debt cancellation agreement terminates due to the |
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early termination of the contract, the recipient of the debt |
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cancellation agreement fee [holder] shall, not later than the 60th |
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day after the date the debt cancellation agreement terminates, [:
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[(1)] refund an appropriate amount of the debt |
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cancellation agreement fee to the retail buyer or forward to the |
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holder [credit] an appropriate amount of the debt cancellation |
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agreement fee to be applied as a credit under the contract [; or
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[(2) cause to be refunded or credited an appropriate
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amount of the debt cancellation agreement fee by providing written
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instruction to the appropriate person]. |
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(g) The recipient of the debt cancellation agreement fee |
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[holder] shall maintain records of any refund or credit of an amount |
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of a debt cancellation agreement fee made under Subsection (e) and |
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provide electronic access to those records until the later of the |
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fourth anniversary of the date of the contract or the second |
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anniversary of the date of the refund or credit. |
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SECTION 7. Chapter 354, Finance Code, is amended by adding |
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Section 354.008 to read as follows: |
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Sec. 354.008. RECORDKEEPING. The holder shall maintain |
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records of a debt cancellation agreement until the fourth |
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anniversary of the date of the contract. |
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SECTION 8. Sections 354.007(d) and (f), Finance Code, are |
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repealed. |
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SECTION 9. Section 354.008, Finance Code, as added by this |
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Act, applies only to a retail installment contract entered into on |
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or after the effective date of this Act. A retail installment |
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contract entered into before the effective date of this Act is |
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governed by the law in effect on the date the contract was entered |
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into, and the former law is continued in effect for that purpose. |
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SECTION 10. This Act takes effect September 1, 2019. |