By: West S.B. No. 2167
A BILL TO BE ENTITLED
AN ACT
relating to the collection of consumer debt by debt buyers.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. This Act shall be known as the Fair Consumer Debt
Collection Act.
SECTION 2. Title 5, Finance Code, is amended by adding
Chapter 397 to read as follows:
CHAPTER 397. COLLECTION OF CONSUMER DEBT BY DEBT BUYERS
Sec. 397.001. DEFINITIONS. In this chapter:
(1) "Charged-off debt" means a consumer debt that a
creditor has determined to be a loss or expense to the creditor
instead of an asset.
(2) "Consumer," "consumer debt," and "creditor" have
the meanings assigned by Section 392.001.
(3) "Debt buyer" means a person who purchases or
otherwise acquires a consumer debt from a creditor or other
subsequent owner of the consumer debt, regardless of whether the
person collects the consumer debt, hires a third party to collect
the consumer debt, or hires an attorney for collection litigation
in connection with the consumer debt. The term does not include:
(A) a person who acquires a charged-off debt
incidental to the purchase of a portfolio that predominantly
consists of consumer debt that has not been charged off; or
(B) a check services company that acquires the
right to collect on a paper or electronic negotiable instrument,
including an Automated Clearing House (ACH) authorization to debit
an account that has not been processed.
(4) "Statute of limitations" means a law in this state
that prescribes the period during which a person may bring a cause
of action.
Sec. 397.002. CONFLICT OF LAW. Unless otherwise expressly
provided, this chapter prevails to the extent of any conflict
between this chapter and any other law of this state.
Sec. 397.003. LIMITATION ON INITIATION OF CONTACT WITH
CONSUMER. A debt buyer may not contact or attempt to contact a
consumer for purposes of debt collection if the debt buyer knows or
has reason to know that a cause of action for collection of the
consumer debt is barred by a statute of limitations.
Sec. 397.004. INITIATION OF ACTION AGAINST OR ARBITRATION
WITH CONSUMER. (a) A debt buyer may not bring an action against,
initiate arbitration with, or commence any other legal proceeding
against a consumer to collect a consumer debt if the debt buyer
knows or has reason to know that a cause of action for collection of
the consumer debt is barred by a statute of limitations.
(b) A cause of action by a debt buyer against a consumer for
collection of a consumer debt that is barred by a statute of
limitations may not be revived by the collection of payment on the
account of the consumer associated with the debt, an oral or written
reaffirmation of the consumer debt, or any other method.
Sec. 397.005. CIVIL ACTION. (a) A debt buyer who violates
this chapter is liable to a person harmed by the violation for:
(1) actual damages; and
(2) reasonable attorney's fees and costs.
(b) An action must be brought under this section not later
than the second anniversary of the date of the last event
constituting the alleged violation for which the action is brought.
SECTION 3. The changes in law made by this Act apply only to
an action of a debt buyer to collect a consumer debt if the action
occurs on or after the effective date of this Act. An action of a
debt buyer to collect a consumer debt that occurs before the
effective date of this Act is governed by the law in effect
immediately before that date, and the former law is continued in
effect for that purpose.
SECTION 4. This Act takes effect September 1, 2017.