By: Hopson H.B. No. 3338
A BILL TO BE ENTITLED
AN ACT
relating to debt cancellation contract agreements
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 348.001, Finance Code, is amended by
adding (11) to read as follows:
Sec. 348.001. DEFINITIONS. In this chapter:
(1) "Buyer's order" means a nonbinding, preliminary
written computation relating to the purchase in a retail
installment transaction of a motor vehicle that describes
specifically:
(A) the motor vehicle being purchased; and
(B) each motor vehicle being traded in.
(2) "Heavy commercial vehicle" means:
(A) a truck or truck tractor that:
(i) has a gross vehicular weight of 19,000
pounds or more; and
(ii) is not used primarily for personal,
family, or household use; or
(B) a trailer or semi trailer designed for use in
combination with a vehicle described by Paragraph (A).
(3) "Holder" means:
(A) a retail seller; or
(B) if a retail installment contract or the
outstanding balance under the contract is sold or otherwise
transferred, the person to whom it is sold or otherwise
transferred.
(3-a) "Motor home" means a motor vehicle that is
designed to provide temporary living quarters and that:
(A) is built on a motor vehicle chassis as an
integral part of or a permanent attachment to the chassis; and
(B) contains at least four of the following
independent life support systems that are permanently installed and
designed to be removed only for repair or replacement and that meet
the standards of the American National Standards Institute,
Standards for Recreational Vehicles:
(i) a cooking facility with an on-board
fuel source;
(ii) a gas or electric refrigerator;
(iii) a toilet with exterior evacuation;
(iv) a heating or air-conditioning system
with an on-board power or fuel source separate from the vehicle
engine;
(v) a potable water supply system that
includes at least a sink, a faucet, and a water tank with an
exterior service supply connection; or
(vi) a 110-125 volt electric power supply.
(4) "Motor vehicle" means an automobile, motor home,
truck, truck tractor, trailer, semi trailer, or bus designed and
used primarily to transport persons or property on a highway. The
term includes a commercial vehicle or heavy commercial
vehicle. The term does not include:
(A) a boat trailer;
(B) a vehicle propelled or drawn exclusively by
muscular power;
(C) a vehicle that is designed to run only on
rails or tracks; or
(D) machinery that is not designed primarily for
highway transportation but may incidentally transport persons or
property on a public highway.
(5) "Retail buyer" means a person who purchases or
agrees to purchase a motor vehicle from a retail seller in a retail
installment transaction.
(6) "Retail installment contract" means one or more
instruments entered into in this state that evidence a retail
installment transaction. The term includes a chattel mortgage, a
conditional sale contract, a security agreement, and a document
that evidences a bailment or lease described by Section 348.002.
The term does not include a buyer's order.
(7) "Retail installment transaction" means a
transaction in which a retail buyer purchases a motor vehicle from a
retail seller other than principally for the purpose of resale and
agrees with the retail seller to pay part or all of the cash price in
one or more deferred installments.
(8) "Retail seller" means a person in the business of
selling motor vehicles to retail buyers in retail installment
transactions.
(9) "Time price differential" means the total amount
added to the principal balance to determine the balance of the
retail buyer's indebtedness under a retail installment contract.
(10-a) "Towable recreation vehicle" means a
nonmotorized vehicle that:
(A) was originally designed and manufactured
primarily to provide temporary human habitation in conjunction with
recreational, camping, or seasonal use;
(B) is titled and registered with the Texas
Department of Transportation as a travel trailer through a county
tax assessor-collector;
(C) is permanently built on a single chassis;
(D) contains at least one life support system;
and
(E) is designed to be towable by a motor vehicle.
(11) "Debt Cancellation Agreement" means a retail
installment contract term or a contractual arrangement modifying a
retail installment contract term under which a retail seller or
holder agrees to cancel all or part of an obligation of the retail
buyer to repay an extension of credit from the retail seller or
holder upon the occurrence of a specified event and does not offer
to pay a specified amount upon determinable contingencies. The
agreement shall not be considered a product of insurance.
SECTION 2. Amend 348, Finance Code, is amended by adding
Section 348.124 as follows:
Sec. 348.124. AGREEMENTS REGARDING DEBT CANCELLATION
AGREEMENTS. In connection with a loan made under this chapter, a
lender may offer to the borrower a debt cancellation agreement, as
defined by Section 348.001(11) of this chapter. A lender shall not
require a borrower to purchase a debt cancellation agreement in
order to obtain the loan.
SECTION 3. Amend 348.208, Finance Code, is amended by
adding (6) and amending (c) as follows:
Sec. 348.208. CHARGES FOR OTHER INSURANCE AND FORMS OF
PROTECTION INCLUDED IN RETAIL INSTALLMENT CONTRACT. (a) A retail
buyer and retail seller may agree in a retail installment contract
to include a charge for insurance coverage that is:
(1) for a risk of loss or liability reasonably related
to:
(A) the motor vehicle;
(B) the use of the motor vehicle; or
(C) goods or services that:
(i) are related to the motor vehicle; and
(ii) may ordinarily be insured with a motor
vehicle;
(2) written on policies or endorsement forms
prescribed or approved by the commissioner of insurance; and
(3) ordinarily available in policies or endorsements
offered to the public.
(b) A retail installment contract may include as a separate
charge an amount for:
(1) motor vehicle property damage or bodily injury
liability insurance;
(2) mechanical breakdown insurance;
(3) participation in a motor vehicle theft protection
plan;
(4) insurance to reimburse the retail buyer for the
amount computed by subtracting the proceeds of the buyer's basic
collision policy on the motor vehicle from the amount owed on the
vehicle if the vehicle has been rendered a total loss; [or]
(5) a warranty or service contract relating to the
motor vehicle[.] ;
(6) a debt cancellation agreement.
(c) Notwithstanding any other law, service contracts and
debt cancellation agreements sold by a retail seller of a motor
vehicle to a retail buyer are not subject to Chapter 101 or 226,
Insurance Code.
SECTION 4. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2009.