HLS 10RS-1256 ENGROSSED
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Regular Session, 2010
HOUSE BILL NO. 452
BY REPRESENTATIVE ARNOLD
MTR VEHICLE/SALES FIN: Provides for changes to the La. Motor Vehicle Sales Finance
Act
AN ACT1
To amend and reenact R.S. 6:969.6(23) and (29), 969.35(A)(2), 969.42, the heading of Part2
VIII of Chapter 10-B of Title 6 of the Louisiana Revised Statutes of 1950, and3
969.51 and to enact R.S. 6:969.6(34) and (35), 969.52, 969.53, and 969.54, relative4
to the Louisiana Motor Vehicle Sales Finance Act; to provide for changes in5
definitions; to provide for new definitions; to provide for debt waiver or debt6
forgiveness agreements; to provide for requirements of GAP coverage; to provide7
for liability, disclosures, or cancellations regarding debt waiver or debt forgiveness8
agreements; and to provide for related matters.9
Be it enacted by the Legislature of Louisiana:10
Section 1. R.S. 6:969.6(23) and (29), 969.35(A)(2), 969.42, the heading of Part VIII11
of Chapter 10-B of Title 6 of the Louisiana Revised Statutes of 1950, and 969.51 are hereby12
amended and reenacted and R.S. 6:969.6(34) and (35), 969.52, 969.53, and 969.54 are13
hereby enacted to read as follows: 14
§969.6. Definitions15
As used in this Chapter:16
* * *17
(23)(a) "Motor vehicle" means any new or used transportation device,18
including automobiles, motorcycles, trucks, and other vehicles that are operated over19
the public highways and the streets of this state, but does not include traction20
engines, boat trailers, road rollers, implements of husbandry, and other agricultural21 HLS 10RS-1256 ENGROSSED
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vehicles. A manufactured home is deemed to be a "motor vehicle" for purposes of1
this Chapter only if it is anticipated at the time of the transaction that the2
manufactured home will not be immobilized pursuant to R.S. 9:1149.4.3
(b) "Motor vehicle" for purposes of GAP coverage means self-propelled or4
towed vehicles designed for personal use, including but not limited to automobiles,5
trucks, motorcycles, recreational vehicles, all-terrain vehicles, snowmobiles,6
campers, boats, personal watercraft, and motorcycle, boat, camper, and personal7
watercraft trailers.8
* * *9
(29) "Salesman" or "agent" means any person employed by an administrator10
licensed by the commission whose duties include the sale of a debt waiver or debt11
forgiveness agreement on behalf of the administrator to a licensee of the12
commission.13
* * *14
(34) "Free-look period" means the period of time from the effective date of15
the debt waiver or debt forgiveness agreement until the date the consumer may16
cancel the contract with a full refund. This period of time shall not be less than thirty17
days.18
(35) "Insurer" means an insurance company licensed, registered, or19
otherwise authorized to do business under the insurance laws of this state.20
* * *21
§969.35. Authority to make consumer loans; assignees; authority to issue debt22
waiver or debt forgiveness agreements23
A.24
* * *25
(2) Unless a person has first obtained a license from the commission, or is26
a supervised financial organization, he shall not engage in business as an27
administrator or as a salesman or agent involving the making of consumer loans or28 HLS 10RS-1256 ENGROSSED
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the origination of a consumer credit sale subject to this Chapter debt waiver or debt1
forgiveness agreements.2
* * *3
§969.42. Venue for litigation or arbitration; choice of law4
A. A provision contained in any document relating to a motor vehicle credit5
transaction or debt waiver or debt forgiveness agreement that was entered into in the6
state of Louisiana requiring that litigation or arbitration be conducted outside of this7
state is void and unenforceable.8
B. Except as to a supervised financial organization, a provision contained in9
any document relating to a motor vehicle credit transaction or debt waiver or debt10
forgiveness agreement that was entered into in the state of Louisiana that seeks to11
apply any law other than Louisiana law to a dispute between the parties to such12
transaction is void and unenforceable.13
* * *14
PART VIII. UNIFORM RETAIL INSTALLMENT SALES CONTRACT 15
GAP COVERAGE16
§969.51. Uniform retail installment sales contract GAP coverage; requirements17
A. The legislature finds that it is beneficial to extenders of credit, consumers,18
and new and used motor vehicle dealers to have uniform documents that can be used19
in the sale and financing of new and used motor vehicles. Uniform retail installment20
sales contracts benefit both parties to a contract by making transactions more21
understandable. Debt waiver or debt forgiveness agreements may be offered, sold,22
or provided to consumers in this state in compliance with this Chapter.23
B. The commission shall create a uniform retail installment sales contract for24
motor vehicle credit transactions subject to this Chapter. The commission shall25
promulgate the contract and any rules for use of the form in accordance with the26
Administrative Procedure Act no later than January 1, 2007. When creating the27
form, the commission shall incorporate all consumer notice and disclosure28 HLS 10RS-1256 ENGROSSED
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requirements provided for in state and federal law. Debt waiver or debt forgiveness1
agreements shall be sold for a single premium.2
C. Use of the uniform retail installment sales contract by a lender or seller3
shall constitute prima facie evidence of compliance with consumer notice and4
disclosure requirements of state and federal law. Notwithstanding any other5
provision of law to the contrary, any cost to a consumer for a debt waiver or debt6
forgiveness agreement entered into in compliance with The Truth in Lending Act,7
15 U.S.C. 1601 et seq., and its implementing regulations, as they may be amended8
from time to time, shall be separately stated and shall not be considered a finance9
charge or interest.10
D. A seller shall insure its debt waiver or debt forgiveness agreement's11
obligations under a contractual liability or other insurance policy issued by an12
insurer. A lender, other than a seller, may insure its debt waiver or debt forgiveness13
agreement’s obligations under a contractual liability policy or other such policy14
issued by an insurer. Any such insurance policy may be directly obtained by a15
lender, seller, or may be procured by an administrator to cover a lender’s or seller’s16
obligations; however, sellers that are lessors on motor vehicles shall not be required17
to insure obligations related to debt waiver or debt forgiveness agreements on such18
leased vehicles.19
E. The debt waiver or debt forgiveness agreement remains a part of the20
contract upon the assignment, sale, or transfer of such contract by the seller or21
lender.22
F. Neither the extension of credit, the term of credit, nor the term of the23
related motor vehicle sale or lease may be conditioned upon the purchase of a debt24
waiver or debt forgiveness agreement.25
G. Any seller or lender that offers a debt waiver or debt forgiveness26
agreement shall report the sale of, and forward funds received on, all such waivers27
to the designated party, if any, as prescribed in any applicable administrative services28 HLS 10RS-1256 ENGROSSED
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agreement, contractual liability policy, other insurance policy, or other specified1
program documents.2
§969.52. Liability; contractual or insurance policies3
A. Contractual liability or other insurance policies insuring debt waiver or4
debt forgiveness agreements shall state the obligation of the insurer to reimburse or5
pay to the creditor any sums the lender is legally obligated to waive under the debt6
waiver or debt forgiveness agreement issued by the seller or lender and purchased7
or held by the consumer.8
B. Coverage under a contractual liability or other insurance policy insuring9
a debt waiver or debt forgiveness agreement shall also cover any subsequent assignee10
upon the assignment, sale, or transfer of the contract.11
C. Coverage under a contractual liability or other insurance policy insuring12
a debt waiver or debt forgiveness agreement shall remain in effect unless cancelled13
or terminated in compliance with applicable insurance laws of this state.14
D. The cancellation or termination of a contractual liability or other15
insurance policy shall not reduce the insurer's responsibility for debt waiver or debt16
forgiveness agreements issued by the seller or lender prior to the date of cancellation17
or termination and for which premium has been received by the insurer.18
§969.53. Cancellation19
A. Debt waiver or debt forgiveness agreements may be cancelled. Debt20
waiver or debt forgiveness agreements shall provide that if a consumer cancels a21
waiver within the "free-look period", the consumer shall be entitled to a full refund22
of the purchase price, so long as no benefits have been provided; or in the event23
benefits have been provided, the consumer may receive a full or partial refund24
pursuant to the terms of the waiver.25
B. In the event of a consumer cancellation of the debt waiver or debt26
forgiveness agreement or early termination of the contract, after the agreement has27
been in effect beyond the "free-look period", the consumer is entitled to a refund of28
any unearned portion of the purchase price of the waiver on terms no less favorable29 HLS 10RS-1256 ENGROSSED
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to the consumer than the method of refund commonly known as the "Rule of 78s"1
or the "sum of digits" refund method. In order to receive a refund, the consumer, in2
accordance with any applicable terms of the waiver, shall provide a written request3
to the lender, administrator, or other party.4
C. If the cancellation of a debt waiver or debt forgiveness agreement occurs5
as a result of a default under the contract or the repossession of the motor vehicle6
associated with the contract, or any other termination of the contract, any refund due7
may be paid directly to the lender or administrator and applied as set forth in8
Subsection D of this Section.9
D. Any cancellation refund under the provisions of this Section may be10
applied by the lender as a reduction of the amount owed under the contract, unless11
the consumer can show that the contract has been paid in full.12
E. No consumer shall be charged a cancellation fee.13
§969.54. Disclosures14
Debt waiver or debt forgiveness agreements shall disclose, as applicable, in15
writing and in clear, understandable language that is easy to read, the following:16
(1) The name and address of the initial lender and the consumer at the time17
of sale and the identity and address of any administrator if different from the lender.18
(2) The purchase price and the terms of the debt waiver or debt forgiveness19
agreement, including without limitation, the requirements for protection, conditions,20
or exclusions with the debt waiver or debt forgiveness agreement.21
(3) A clear statement in the debt waiver or debt forgiveness agreement given22
to the consumer that by its acceptance as an amendment to the contract upon23
assignment, the lender agrees to waive the consumer's liability for the difference24
between the amount owed, excluding past due amounts, payment extensions,25
insurance, prior unrepaired damage for which the consumer has been paid by an26
insurer, or other charges, under the consumer's contract and the amount paid by the27
consumer's primary insurer after a vehicle is deemed a total loss from a peril covered28
by the consumer's primary insurance company or if there is no primary insurance on29 HLS 10RS-1256 ENGROSSED
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the date of loss, the actual cash value of the motor vehicle at the time of loss as1
determined by an established value guide.2
(4) That the consumer may cancel the debt waiver or debt forgiveness3
agreement within a "free-look period" as specified in the waiver, and shall be entitled4
to a full refund of the purchase price, so long as no benefits have been provided; or5
in the event benefits have been provided, the consumer may receive a full or partial6
refund of the premium paid pursuant to the terms of the waiver.7
(5) The procedure the consumer shall follow, if any, to obtain debt waiver8
or debt forgiveness agreement benefits under the terms and conditions of the waiver,9
including a telephone number and address where the consumer may apply for waiver10
benefits.11
(6) That in order to receive any refund due in the event of a debt waiver or12
debt forgiveness agreements's cancellation of the debt waiver or debt forgiveness13
agreements or early termination of the contract after the "free-look period" of the14
debt waiver or debt forgiveness waiver, the consumer, in accordance with terms of15
the waiver, shall provide a written request to cancel to the lender, administrator, or16
such other party, within ninety days of the occurrence of the event terminating the17
contract.18
(7) Any refund of the unearned purchase price of the debt waiver or debt19
forgiveness agreement due, in the event of cancellation of the debt waiver or debt20
forgiveness agreement or early termination of the contract, shall be on terms no less21
favorable to the consumer than the method of refund commonly known as the "Rule22
of 78s" or the "sum of digits" refund method.23
(8) That neither the extension of credit, the terms of the credit, nor the terms24
of the related motor vehicle sale or lease, may be conditioned upon the purchase of25
the debt waiver or debt forgiveness agreements.26 HLS 10RS-1256 ENGROSSED
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DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Arnold HB No. 452
Abstract: Provides for changes to the La. Motor Vehicle Sales Finance Act regarding debt
waiver or debt forgiveness agreements.
Present law provides for a definition of "motor vehicle".
Proposed law retains present law but provides that a "motor vehicle" for purposes of GAP
coverage means self-propelled or towed vehicles designed for personal use, including but
not limited to automobiles, trucks, motorcycles, recreational vehicles, all-terrain vehicles,
snowmobiles, campers, boats, personal watercraft, and motorcycle, boat, camper, and
personal watercraft trailers.
Present law provides that a "salesman" or "agent" means any person employed by an
administrator licensed by the commission whose duties include the sale of a debt waiver or
debt forgiveness agreement on behalf of the administrator to a licensee of the commission.
Proposed law changes present law to provide that a "salesman" or "agent" means any person
licensed by the commission whose duties include the sale of a debt waiver or debt
forgiveness agreement on behalf of the administrator.
Proposed law provides for a definition of "free-look period" and "insurer".
Present law provides that unless a person has first obtained a license from the commission,
or is a supervised financial organization, he shall not engage in business as an administrator
or as a salesman or agent involving the making of consumer loans or the origination of a
consumer credit sale.
Proposed law changes present law to prohibit a nonlicensee from engaging in business
involving debt waiver or debt forgiveness agreements.
Present law provides that a provision contained in any document relating to a motor vehicle
credit transaction that was entered into in the state of La. requiring that litigation or
arbitration be conducted outside of this state is void and unenforceable.
Proposed law retains present law but also includes transactions involving debt waiver or debt
forgiveness agreements.
Present law provides that a provision contained in any document relating to a motor vehicle
credit transaction that was entered into in the state of La. that seeks to apply any law other
than La. law to a dispute between the parties to such transaction is void and unenforceable.
Proposed law retains present law but also includes transactions involving debt waiver or debt
forgiveness agreements.
Present law provides for legislative findings.
Proposed law repeals present law.
Proposed law provides that debt waiver or debt forgiveness agreements may be offered, sold,
or provided to consumers in this state. HLS 10RS-1256 ENGROSSED
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are additions.
Present law provides for a uniform retail installment sales contract.
Proposed law repeals present law.
Proposed law provides that a debt waiver or debt forgiveness agreements shall be sold for
a single premium.
Present law provides that the use of the uniform retail installment sales contract by a lender
or seller shall constitute prima facie evidence of compliance with consumer notice and
disclosure requirements of state and federal law.
Proposed law repeals present law.
Proposed law provides that any cost to the consumer for a debt waiver or debt forgiveness
agreement entered into in compliance with The Truth in Lending Act, 15 U.S.C. 1601 et
seq., and its implementing regulations, as they may be amended from time to time, shall be
separately stated and shall not be considered a finance charge or interest.
Proposed law requires a seller to insure its debt waiver or debt forgiveness agreement's
obligations under a contractual liability or other insurance policy issued by an insurer. A
lender, other than a seller, may insure its debt waiver or debt forgiveness agreement's
obligations under a contractual liability policy or other such policy issued by an insurer.
Proposed law provides that the debt waiver or debt forgiveness agreement remains a part of
the contract upon the assignment, sale, or transfer of such contract by the seller or lender.
Proposed law provides that neither the extension of credit, the term of credit, nor the term
of the related motor vehicle sale or lease may be conditioned upon the purchase of a debt
waiver or debt forgiveness agreement.
Proposed law provides that any seller or lender that offers a debt waiver or debt forgiveness
agreement shall report the sale of, and forward funds received on all such waivers to the
designated party, if any, as prescribed in any applicable administrative services agreement,
contractual liability policy, other insurance policy, or other specified program documents.
Proposed law requires contractual liability or other insurance policies insuring debt waiver
or debt forgiveness agreements to state the obligation of the insurer to reimburse or pay to
the creditor any sums the lender is legally obligated to waive under the debt waiver or debt
forgiveness agreement issued by the seller or lender and purchased or held by the consumer.
Proposed law requires coverage under a contractual liability or other insurance policy
insuring a debt waiver or debt forgiveness agreement to also cover any subsequent assignee
upon the assignment, sale, or transfer of the contract.
Proposed law requires coverage under a contractual liability or other insurance policy
insuring a debt waiver or debt forgiveness agreement to remain in effect unless cancelled or
terminated in compliance with applicable insurance laws of this state.
Proposed law provides that the cancellation or termination of a contractual liability or other
insurance policy shall not reduce the insurer's responsibility for debt waiver or debt
forgiveness agreements issued by the seller or lender prior to the date of cancellation or
termination and for which premium has been received by the insurer.
Proposed law allows debt waiver or debt forgiveness agreements to be cancelled under
certain situations. HLS 10RS-1256 ENGROSSED
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are additions.
Proposed law provides that if a debt waiver or debt forgiveness agreement is cancelled after
the agreement has been in effect beyond the "free-look period", the consumer is entitled to
a refund of any unearned portion of the purchase price of the waiver on terms no less
favorable to the consumer than the method of refund commonly known as the "Rule of 78s"
or the "sum of digits" refund method.
Proposed law provides that if the cancellation of a debt waiver or debt forgiveness agreement
occurs as a result of a default under the contract or the repossession of the motor vehicle
associated with the contract, or any other termination of the contract, any refund due may
be paid directly to the lender or administrator.
Proposed law provides that any cancellation refund may be applied by the lender as a
reduction of the amount owed under the contract, unless the consumer can show that the
contract has been paid in full.
Proposed law prohibits cancellation fees.
Proposed law requires debt waiver or debt forgiveness agreements to disclose, as applicable,
in writing and in clear, understandable language that is easy to read, the following:
(1)The name and address of the initial lender and the consumer at the time of sale and
the identity and address of any administrator if different from the lender.
(2)The purchase price and the terms of the debt waiver or debt forgiveness agreement.
(3)A clear statement in the debt waiver or debt forgiveness agreement given to the
consumer that by its acceptance as an amendment to the contract upon assignment,
the lender agrees to waive the consumer's liability for the difference between the
amount owed, excluding past-due amounts, payment extensions, insurance, prior
unrepaired damage for which the consumer has been paid by an insurer, or other
charges, under the consumer's contract and the amount paid by the consumer's
primary insurer after a vehicle is deemed a total loss from a peril covered by the
consumer's primary insurance company or if there is no primary insurance on the
date of loss, the actual cash value of the motor vehicle at the time of loss as
determined by an established value guide.
(4)That the consumer may cancel the debt waiver or debt forgiveness agreement within
a "free-look period" as specified in the waiver, and shall be entitled to a full refund
of the purchase price, so long as no benefits have been provided; or in the event
benefits have been provided, the consumer may receive a full or partial refund of the
premium paid pursuant to the terms of the waiver.
(5)The procedure the consumer shall follow, if any, to obtain debt waiver or debt
forgiveness agreement benefits under the terms and conditions of the waiver.
(6)That in order to receive any refund due in the event of a debt waiver or debt
forgiveness agreements's cancellation of the debt waiver or debt forgiveness
agreements or early termination of the contract after the "free-look period" of the
debt waiver or debt forgiveness waiver, the consumer, in accordance with terms of
the waiver, shall provide a written request to cancel to the lender, administrator, or
such other party, within 90 days of the occurrence of the event terminating the
contract.
(7)Any refund of the unearned purchase price of the debt waiver or debt forgiveness
agreement due, in the event of cancellation of the debt waiver or debt forgiveness
agreement or early termination of the contract shall be on terms no less favorable to
the consumer than the method of refund commonly known as the "Rule of 78s" or
the "sum of digits" refund method. HLS 10RS-1256 ENGROSSED
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(8)That neither the extension of credit, the terms of the credit, nor the terms of the
related motor vehicle sale or lease, may be conditioned upon the purchase of the debt
waiver or debt forgiveness agreements.
(Amends R.S. 6:969.6(23) and (29), 969.35(A)(2), 969.42, the heading of Part VIII of
Chapter 10-B of Title 6 of the Louisiana Revised Statutes of 1950, and 969.51; Adds R.S.
6:969.6(34) and (35), 969.52, 969.53, and 969.54)
Summary of Amendments Adopted by House
Committee Amendments Proposed by House Committee on Commerce to the original
bill.
1. Removed a 90-day requirement that the consumer provide written request to the
lender, administrator, or other party of the event terminating the finance
agreement.
2. Clarified that the lender agrees to waive the consumer's liability for the
difference between the amount owed, excluding past due amounts, payment
extensions, insurance, prior unrepaired damage for which the consumer has been
paid by an insurer, or other charges, under the consumer's contract and the
amount paid by the consumer's primary insurer after a vehicle is deemed a total
loss from a peril covered by the consumer's primary insurance company or if
there is no primary insurance on the date of loss, the actual cash value of the
motor vehicle at the time of loss as determined by an established value guide.