By: Phelan H.B. No. 3762
A BILL TO BE ENTITLED
AN ACT
relating to the recovery of certain debts owed to this state;
authorizing fees.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 321, Government Code, is amended by
adding Subchapter B and to read as follows:
SUBCHAPTER B. COLLECTION OF DEBT OWED TO STATE
Sec. 321.551. DEFINITIONS. In this subchapter:
(1) "Account" includes any demand deposit account,
checking account, negotiable withdrawal order account, savings
account, time deposit account, money market mutual fund, or any
type of mutual fund account, and intangible property. The term
account does not include amounts held by a financial institution as
collateral for loans extended by the financial institution.
(2) "Debt" a legal non-tax related obligation to pay
money, including any principal, any interest that has accrued or
will accrue until the debt is paid, any penalties, any costs, and
any other charges permitted by law. The term debt includes any
non-tax related obligation of any kind referred to the SORC for
collection by the state, government, or any government agency, by
the Judicial System, or by the State higher education system.
(3) "Debtor" means a person who is indebted to the
state, government, or any government agency for any delinquent
accounts, charges, fees, loans, taxes, or other indebtedness due,
or any obligation being collected by the SORC.
(4) "Employee" means any person or entity that
performs services for another and includes a debtor acting as a
contractor, subcontractor, distributor, agent, or in any
representative capacity in which the debtor receives any form of
consideration.
(5) "Employer" means any person or entity that pays an
employee to do a specific task or tasks.
(6) "Financial institution" any financial institution
and any other depository institution, credit union, benefit
association, insurance company, safe deposit company, bond fund,
money market mutual fund, and any mutual fund of any kind or
character.
(7) "Final debt" a debt that is no longer subject to an
appeal.
(8) "Final notification" the notification provided by
section 12 of this Act.
(9) "Referring entity" the entity referring the debt
to the SORC for collection.
(10) "State Obligation Recovery Center (SORC)" is not
a state agency and means a benefits funded contractor procured as a
third-party to recover debts owed to the state.
(11) "Wage" means any form of compensation due a
debtor and includes wages, salary, bonus, commission, or other
payment directly or indirectly related to consideration for the
performance of a service.
Sec. 321.552. DUTIES. The SORC shall work to collect every
debt referred to the SORC. Exceptions to the use of the SORC are
permissible if the debt includes HIPPA data. The SORC is not a debt
collection agency. The character of the debt in the hands of the
referring entity does not change by the referral of the debt to the
SORC for collection.
Sec. 321.553. ANNUAL ASSESSMENT OF OUTSTANDING DEBT. The
third-party vendor selected by the state auditor to operate the
SORC shall preform an annual assessment of all outstanding debt
eligible for referral to the SORC.
Sec. 321.554. GENERAL POWERS. The SORC shall have the
ability to use the referring entity's statutory collection
authority to recover the obligations owed to the referring entity.
The SORC shall also have the authority to:
(1) Sue;
(2) File liens;
(3) Enter into payment agreements with debtors;
(4) Impose a cost recovery charge;
(5) Collect data for obligation recovery purposes;
(6) Establish and maintain a centralized electronic
obligation registry;
(7) Exercise the settlement authority granted to it by
the referring entity;
(8) Provide information to the motor vehicle division
of the Department of Revenue regarding the non-renewal of
registrations for motor vehicles, motorcycles, boats or other
conveyances;
(9) Provide information to any unit of the state
regarding the non-renewal of professional licenses;
(10) Provide information to the Department
responsible for hunting licenses and fishing licenses regarding the
non-issuance of hunting and fishing licenses;
(11) Impose an administrative wage assignment
process;
(12) Establish and maintain a financial institution
data match system;
(13) Impose an administrative bank levy process;
(14) Set-off against any monies to be paid by the state
to a debtor for any obligation owed by the debtor;
(15) Contract with collection agencies for the
recovery of an obligation on behalf of the SORC;
(16) Utilize any other obligation recovery methods
authorized by state law; and
(17) All other authority granted to the SORC by this
Act.
(b) The SORC may determine which method or combination is
most suitable to recover the obligation.
(c) A state debtor may be prohibited from renewing,
obtaining or maintaining the following licenses or registrations
unless the obligation and cost recovery charge is either paid in
full or the debtor has entered into a payment plan with the SORC and
the payment plan is current:
(1) Any registration for any motor vehicle,
motorcycle, boat, or other conveyances;
(2) Any professional license; and
(3) Any hunting license or any fishing license.
Sec. 321.555 COLLECTION CHARGE. (a) To fund its
operations, the SORC will collect a cost recovery charge, which
shall be 20 percent of the principal amount of the obligation. All
methods available to recover any obligation referred to the SORC
are available to the SORC for the collection of the cost recovery
charge. The SORC shall retain the cost recovery fee and transfer
any monies collected from a debtor to the referring entity within
thirty days after the end of the month in which the monies were
collected. If the amount recovered is less than the obligation and
the cost recovery charge, the amount recovered shall be prorated
between the referred obligation and the cost recovery charge.
(b) Prior to transferring any obligation to the SORC, the
referring entity shall send a final notification to the debtor that
the obligation will be referred to the SORC and a 20 percent cost
recovery charge will be added. Challenges to any obligation
recovery by the SORC may be initiated only in writing and by the
debtor.
(c) Any executive branch agency shall use the SORC to
collect any executive branch agency debt.
(d) The Judicial System may use the SORC to collect any
costs, fines, fees, or restitution ordered in any adult criminal
proceeding.
(e) The state higher education system may use the SORC to
collect any debt owed within the state higher education system.
(f) All local governments, including municipalities,
counties, and townships, may use the SORC to collect any debt owed
them.
Sec. 321.556. INFORMATION FOR COLLECTION. (a) The SORC
shall keep any information regarding any obligation referred to the
SORC confidential. Notwithstanding any law to the contrary,
referring entities are authorized to transmit data to the SORC
deemed necessary by the SORC to aid in the obligation recovery.
(b) Information a referring entity provides to the SORC may
be used only for the purpose of collecting a referred debt.
Sec. 321.557. REMITTANCE AND DEPOSIT OF COLLECTED AMOUNTS.
(a) Except as provided by Sec. 321.554 a contracted third-party
vendor shall remit to the referring entity all amounts the
collector collects on debts transferred to the SORC.
(b) The referring entity shall deposit the remitted amounts
to the credit of the same funds or accounts to which the money would
have been deposited if collected by the referring entity.
(c) If more than one debt owed by the debtor is transferred
to the SORC, amounts recovered from the debtor and allocated to each
referred debt in the order in which the debts were referred to the
SORC or, if the debts were referred concurrently, are allocated
proportionally to each debt.
(d) Any payment of any kind to be made to a debtor by the
state, when the debtor has an obligation that is referred to the
SORC, is subject to offset by the SORC unless the obligation and
cost recovery charge is either paid in full or the debtor has
entered into a payment plan with SORC and the payment plan is
current.
(e) Notwithstanding other statutory provisions which
provide for execution, attachment, garnishment, or levy against
accounts, the SORC may use an administrative wage assignment or
administrative bank levy process to collect the debt referred to
the SORC.
(f) If the SORC is unable to recover the referred
obligation, the SORC, with the approval of the referring entity,
may forward the obligation to a collection agency, which is
permitted to add a collection charge.
Sec. 321.558. ANNUAL REPORT. Not later than October 1 of
each year, the state auditor shall provide a written report to the
legislature concerning the collection of referred debts under this
subchapter during the preceding state fiscal year.
Sec. 321.559. RULES. The state auditor shall have the
ability to promulgate rules for operation of the SORC and shall
implement this subchapter by December 31, 2017. The SORC shall
maintain the necessary data to provide statistical measurements of
the operation of the SORC as provided in this Act.
SECTION 2. 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, 2017.