| 1 | 1 | | By: West S.B. No. 2167 |
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| 2 | 2 | | |
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| 3 | 3 | | |
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| 4 | 4 | | A BILL TO BE ENTITLED |
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| 5 | 5 | | AN ACT |
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| 6 | 6 | | relating to the collection of consumer debt by debt buyers. |
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| 7 | 7 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 8 | 8 | | SECTION 1. This Act shall be known as the Fair Consumer Debt |
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| 9 | 9 | | Collection Act. |
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| 10 | 10 | | SECTION 2. Title 5, Finance Code, is amended by adding |
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| 11 | 11 | | Chapter 397 to read as follows: |
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| 12 | 12 | | CHAPTER 397. COLLECTION OF CONSUMER DEBT BY DEBT BUYERS |
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| 13 | 13 | | Sec. 397.001. DEFINITIONS. In this chapter: |
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| 14 | 14 | | (1) "Charged-off debt" means a consumer debt that a |
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| 15 | 15 | | creditor has determined to be a loss or expense to the creditor |
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| 16 | 16 | | instead of an asset. |
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| 17 | 17 | | (2) "Consumer," "consumer debt," and "creditor" have |
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| 18 | 18 | | the meanings assigned by Section 392.001. |
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| 19 | 19 | | (3) "Debt buyer" means a person who purchases or |
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| 20 | 20 | | otherwise acquires a consumer debt from a creditor or other |
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| 21 | 21 | | subsequent owner of the consumer debt, regardless of whether the |
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| 22 | 22 | | person collects the consumer debt, hires a third party to collect |
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| 23 | 23 | | the consumer debt, or hires an attorney for collection litigation |
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| 24 | 24 | | in connection with the consumer debt. The term does not include: |
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| 25 | 25 | | (A) a person who acquires a charged-off debt |
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| 26 | 26 | | incidental to the purchase of a portfolio that predominantly |
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| 27 | 27 | | consists of consumer debt that has not been charged off; or |
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| 28 | 28 | | (B) a check services company that acquires the |
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| 29 | 29 | | right to collect on a paper or electronic negotiable instrument, |
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| 30 | 30 | | including an Automated Clearing House (ACH) authorization to debit |
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| 31 | 31 | | an account that has not been processed. |
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| 32 | 32 | | (4) "Statute of limitations" means a law in this state |
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| 33 | 33 | | that prescribes the period during which a person may bring a cause |
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| 34 | 34 | | of action. |
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| 35 | 35 | | Sec. 397.002. CONFLICT OF LAW. Unless otherwise expressly |
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| 36 | 36 | | provided, this chapter prevails to the extent of any conflict |
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| 37 | 37 | | between this chapter and any other law of this state. |
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| 38 | 38 | | Sec. 397.003. LIMITATION ON INITIATION OF CONTACT WITH |
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| 39 | 39 | | CONSUMER. A debt buyer may not contact or attempt to contact a |
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| 40 | 40 | | consumer for purposes of debt collection if the debt buyer knows or |
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| 41 | 41 | | has reason to know that a cause of action for collection of the |
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| 42 | 42 | | consumer debt is barred by a statute of limitations. |
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| 43 | 43 | | Sec. 397.004. INITIATION OF ACTION AGAINST OR ARBITRATION |
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| 44 | 44 | | WITH CONSUMER. (a) A debt buyer may not bring an action against, |
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| 45 | 45 | | initiate arbitration with, or commence any other legal proceeding |
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| 46 | 46 | | against a consumer to collect a consumer debt if the debt buyer |
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| 47 | 47 | | knows or has reason to know that a cause of action for collection of |
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| 48 | 48 | | the consumer debt is barred by a statute of limitations. |
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| 49 | 49 | | (b) A cause of action by a debt buyer against a consumer for |
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| 50 | 50 | | collection of a consumer debt that is barred by a statute of |
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| 51 | 51 | | limitations may not be revived by the collection of payment on the |
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| 52 | 52 | | account of the consumer associated with the debt, an oral or written |
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| 53 | 53 | | reaffirmation of the consumer debt, or any other method. |
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| 54 | 54 | | Sec. 397.005. CIVIL ACTION. (a) A debt buyer who violates |
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| 55 | 55 | | this chapter is liable to a person harmed by the violation for: |
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| 56 | 56 | | (1) actual damages; and |
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| 57 | 57 | | (2) reasonable attorney's fees and costs. |
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| 58 | 58 | | (b) An action must be brought under this section not later |
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| 59 | 59 | | than the second anniversary of the date of the last event |
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| 60 | 60 | | constituting the alleged violation for which the action is brought. |
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| 61 | 61 | | SECTION 3. The changes in law made by this Act apply only to |
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| 62 | 62 | | an action of a debt buyer to collect a consumer debt if the action |
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| 63 | 63 | | occurs on or after the effective date of this Act. An action of a |
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| 64 | 64 | | debt buyer to collect a consumer debt that occurs before the |
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| 65 | 65 | | effective date of this Act is governed by the law in effect |
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| 66 | 66 | | immediately before that date, and the former law is continued in |
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| 67 | 67 | | effect for that purpose. |
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| 68 | 68 | | SECTION 4. This Act takes effect September 1, 2017. |
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