| 1 | 1 | | 81R21534 KFF-F |
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| 2 | 2 | | By: Hopson, Parker H.B. No. 3338 |
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| 3 | 3 | | Substitute the following for H.B. No. 3338: |
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| 4 | 4 | | By: Hopson C.S.H.B. No. 3338 |
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| 5 | 5 | | |
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| 6 | 6 | | |
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| 7 | 7 | | A BILL TO BE ENTITLED |
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| 8 | 8 | | AN ACT |
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| 9 | 9 | | relating to debt cancellation agreements offered in connection with |
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| 10 | 10 | | motor vehicle retail installment contracts. |
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| 11 | 11 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 12 | 12 | | SECTION 1. Section 348.001, Finance Code, is amended by |
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| 13 | 13 | | adding Subdivision (1-a) to read as follows: |
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| 14 | 14 | | (1-a) "Debt cancellation agreement" means a retail |
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| 15 | 15 | | installment contract term or a contractual arrangement modifying a |
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| 16 | 16 | | retail installment contract term under which a retail seller or |
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| 17 | 17 | | holder agrees to cancel all or part of an obligation of the retail |
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| 18 | 18 | | buyer to repay an extension of credit from the retail seller or |
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| 19 | 19 | | holder on the occurrence of the total loss or theft of the motor |
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| 20 | 20 | | vehicle that is the subject of the retail installment contract but |
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| 21 | 21 | | does not include an offer to pay a specified amount on the total |
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| 22 | 22 | | loss or theft of the motor vehicle. |
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| 23 | 23 | | SECTION 2. Section 348.005, Finance Code, is amended to |
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| 24 | 24 | | read as follows: |
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| 25 | 25 | | Sec. 348.005. ITEMIZED CHARGE. An amount in a retail |
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| 26 | 26 | | installment contract is an itemized charge if the amount is not |
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| 27 | 27 | | included in the cash price and is the amount of: |
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| 28 | 28 | | (1) fees for registration, certificate of title, and |
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| 29 | 29 | | license and any additional registration fees charged by a full |
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| 30 | 30 | | service deputy under Section 502.114, Transportation Code; |
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| 31 | 31 | | (2) any taxes; |
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| 32 | 32 | | (3) fees or charges prescribed by law and connected |
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| 33 | 33 | | with the sale or inspection of the motor vehicle; and |
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| 34 | 34 | | (4) charges authorized for insurance, service |
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| 35 | 35 | | contracts, [or] warranties, or a debt cancellation agreement by |
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| 36 | 36 | | Subchapter C. |
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| 37 | 37 | | SECTION 3. Subchapter B, Chapter 348, Finance Code, is |
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| 38 | 38 | | amended by adding Section 348.124 to read as follows: |
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| 39 | 39 | | Sec. 348.124. DEBT CANCELLATION AGREEMENTS. (a) In |
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| 40 | 40 | | connection with a retail installment transaction under this |
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| 41 | 41 | | chapter, a retail seller may offer to the retail buyer a debt |
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| 42 | 42 | | cancellation agreement. The retail seller may not require that the |
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| 43 | 43 | | purchase of a debt cancellation agreement by the retail buyer be |
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| 44 | 44 | | made in order to enter into a retail installment transaction. |
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| 45 | 45 | | (b) A debt cancellation agreement is not considered an |
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| 46 | 46 | | insurance product. |
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| 47 | 47 | | (c) The amount charged for a debt cancellation agreement |
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| 48 | 48 | | made in connection with a retail installment contract must be |
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| 49 | 49 | | reasonable. |
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| 50 | 50 | | (d) In addition to other disclosures required by state or |
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| 51 | 51 | | federal law, the retail seller shall provide to the retail buyer a |
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| 52 | 52 | | separate notice in connection with the retail installment contract |
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| 53 | 53 | | stating that the retail buyer is not required to accept or provide a |
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| 54 | 54 | | debt cancellation agreement in order to purchase the motor vehicle |
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| 55 | 55 | | under a retail installment contract. |
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| 56 | 56 | | SECTION 4. Sections 348.208(b) and (c), Finance Code, are |
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| 57 | 57 | | amended to read as follows: |
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| 58 | 58 | | (b) A retail installment contract may include as a separate |
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| 59 | 59 | | charge an amount for: |
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| 60 | 60 | | (1) motor vehicle property damage or bodily injury |
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| 61 | 61 | | liability insurance; |
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| 62 | 62 | | (2) mechanical breakdown insurance; |
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| 63 | 63 | | (3) participation in a motor vehicle theft protection |
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| 64 | 64 | | plan; |
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| 65 | 65 | | (4) insurance to reimburse the retail buyer for the |
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| 66 | 66 | | amount computed by subtracting the proceeds of the buyer's basic |
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| 67 | 67 | | collision policy on the motor vehicle from the amount owed on the |
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| 68 | 68 | | vehicle if the vehicle has been rendered a total loss; [or] |
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| 69 | 69 | | (5) a warranty or service contract relating to the |
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| 70 | 70 | | motor vehicle; or |
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| 71 | 71 | | (6) a debt cancellation agreement if the agreement is |
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| 72 | 72 | | included as a term of a retail installment contract under Section |
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| 73 | 73 | | 348.124. |
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| 74 | 74 | | (c) Notwithstanding any other law, service contracts and |
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| 75 | 75 | | debt cancellation agreements sold by a retail seller of a motor |
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| 76 | 76 | | vehicle to a retail buyer are not subject to Chapter 101 or 226, |
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| 77 | 77 | | Insurance Code. |
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| 78 | 78 | | SECTION 5. This Act takes effect September 1, 2009. |
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