83R1880 ATP-D
By: Anchia H.B. No. 1040
A BILL TO BE ENTITLED
AN ACT
relating to the repayment of certain extensions of consumer credit
facilitated by a credit access business.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter C-1, Chapter 393, Finance Code, is
amended by adding Sections 393.225 and 393.226 to read as follows:
Sec. 393.225. EXTENDED PAYMENT PLAN. (a) A credit access
business may obtain for a consumer or assist a consumer in obtaining
an extended payment plan for an extension of consumer credit in the
form of a deferred presentment transaction or motor vehicle title
loan that the credit access business obtained for the consumer or
assisted the consumer in obtaining.
(b) A consumer is eligible for an extended payment plan
under this section if:
(1) the consumer has not entered into an extended
payment plan with the credit access business during the preceding
12 months;
(2) the extension of consumer credit has been
refinanced four times; and
(3) the extended payment plan was requested before the
debt was due.
(c) An extended payment plan must:
(1) be in writing;
(2) be signed by the credit access business and the
consumer; and
(3) describe the terms of the plan.
(d) The credit access business may not charge the consumer
fees or other charges in connection with the making of payments of
principal or other amounts owed under an extended payment plan.
(e) An extended payment plan must provide for four equal or
nearly equal payments of principal and interest, with all principal
and interest to be paid in full in the fourth payment. The consumer
may prepay the debt without penalty at any time.
(f) During the period of the extended payment plan:
(1) the credit access business may not obtain for the
consumer or assist the consumer in obtaining an additional
extension of consumer credit; and
(2) a person may not engage in debt collection
activities for the debt being repaid under the extended payment
plan, if the consumer has made timely payments under the plan.
Sec. 393.226. PAYMENT SCHEDULES FOR CERTAIN DEFERRED
PRESENTMENT TRANSACTIONS. A deferred presentment transaction that
a credit access business obtains for a consumer or assists a
consumer in obtaining and that is payable in installments must be
payable on a fully amortizing, declining principal balance basis,
with substantially equal payments to be made as agreed to by the
parties to the transaction. If fees are precomputed and the debt is
prepaid in full, any unearned fees must be refunded to the consumer.
SECTION 2. The heading to Subchapter C-1, Chapter 393,
Finance Code, is amended to read as follows:
SUBCHAPTER C-1. NOTICE, [AND] DISCLOSURE, AND EXTENSION OF CREDIT
PROVISION REQUIREMENTS APPLICABLE TO [FOR] CERTAIN CREDIT SERVICES
ORGANIZATIONS
SECTION 3. Section 393.222(a), Finance Code, is amended to
read as follows:
(a) A credit access business shall post, in a conspicuous
location in an area of the business accessible to consumers and on
any Internet website, including a social media site, maintained by
the credit access business:
(1) a schedule of all fees to be charged for services
performed by the credit access business in connection with deferred
presentment transactions and motor vehicle title loans, as
applicable;
(2) a notice of the name and address of the Office of
Consumer Credit Commissioner and the telephone number of the
office's consumer helpline;
(3) a notice of the right to enter into an extended
payment plan; and
(4) [(3)] a notice that reads as follows:
"An advance of money obtained through a payday loan or auto
title loan is not intended to meet long-term financial needs. A
payday loan or auto title loan should only be used to meet immediate
short-term cash needs. Refinancing the loan rather than paying the
debt in full when due will require the payment of additional
charges."
SECTION 4. Section 393.223(a), Finance Code, is amended to
read as follows:
(a) Before performing services described by Section
393.221(1), a credit access business must provide to a consumer a
disclosure adopted by rule of the Finance Commission of Texas that
discloses the following in a form prescribed by the commission:
(1) the interest, fees, and annual percentage rates,
as applicable, to be charged on a deferred presentment transaction
or on a motor vehicle title loan, as applicable, in comparison to
interest, fees, and annual percentage rates to be charged on other
alternative forms of consumer debt;
(2) the amount of accumulated fees a consumer would
incur by renewing or refinancing a deferred presentment transaction
or motor vehicle title loan that remains outstanding for a period of
two weeks, one month, two months, and three months; [and]
(3) information regarding the typical pattern of
repayment of deferred presentment transactions and motor vehicle
title loans; and
(4) the right to enter into an extended payment plan.
SECTION 5. Section 393.226, Finance Code, as added by this
Act, applies only to an extension of consumer credit made on or
after the effective date of this Act. An extension of consumer
credit made before the effective date of this Act is governed by the
law in effect on the date the extension of consumer credit was made,
and the former law is continued in effect for that purpose.
SECTION 6. This Act takes effect September 1, 2013.