Texas 2019 - 86th Regular

Texas Senate Bill SB1586 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	86R8982 ATP-F
2	2	By: Hughes S.B. No. 1586
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to debt cancellation agreements offered in connection with
8	8	certain retail installment contracts.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 354.001, Finance Code, is amended by
11	11	adding Subdivision (3-a) to read as follows:
12	12	(3-a) "Debt cancellation agreement fee" means the
13	13	amount charged for a debt cancellation agreement made in connection
14	14	with a contract.
15	15	SECTION 2. Section 354.002(b), Finance Code, is amended to
16	16	read as follows:
17	17	(b) The debt cancellation agreement fee [amount charged for
18	18	a debt cancellation agreement made in connection with a contract]
19	19	may not exceed five percent of the amount financed pursuant to the
20	20	contract. Section 348.124(c) does not apply to a debt cancellation
21	21	agreement regulated under this chapter.
22	22	SECTION 3. Section 354.004, Finance Code, is amended to
23	23	read as follows:
24	24	Sec. 354.004. REQUIRED DEBT CANCELLATION AGREEMENT
25	25	LANGUAGE. A debt cancellation agreement must state:
26	26	(1) the contact information of the retail seller, the
27	27	holder, and any administrator of the debt cancellation agreement;
28	28	(2) the name and address of the retail buyer;
29	29	(3) the cost and term of the debt cancellation
30	30	agreement;
31	31	(4) the procedure the retail buyer must follow to
32	32	obtain benefits under the terms of the debt cancellation agreement,
33	33	including a telephone number and address where the retail buyer may
34	34	provide notice under the debt cancellation agreement;
35	35	(5) the period during which the retail buyer is
36	36	required to notify the retail seller, the holder, or any
37	37	administrator of the agreement of any potential loss under the debt
38	38	cancellation agreement for total loss or theft of the covered
39	39	vehicle;
40	40	(6) that in order to make a claim, the retail buyer
41	41	must provide or complete some or all of the following documents and
42	42	provide those documents to the retail seller, the holder, or any
43	43	administrator of the agreement:
44	44	(A) a debt cancellation request form;
45	45	(B) proof of loss and settlement payment from the
46	46	retail buyer's primary comprehensive, collision, or uninsured or
47	47	underinsured motorist policy or other parties' liability insurance
48	48	policy for the settlement of the insured total loss of the covered
49	49	vehicle;
50	50	(C) verification of the retail buyer's primary
51	51	insurance deductible;
52	52	(D) a copy of any police report filed in
53	53	connection with the total loss or theft of the covered vehicle; and
54	54	(E) a copy of the damage estimate;
55	55	(7) that documentation not described by Subdivision
56	56	(6) or required by the retail seller, the holder, or any
57	57	administrator of the agreement is not required to substantiate the
58	58	loss or determine the amount of debt to be canceled;
59	59	(8) that notwithstanding the collection of the
60	60	documents under Subdivision (6), on reasonable advance notice the
61	61	retail seller, the holder, or any administrator of the agreement
62	62	may inspect the retail buyer's covered vehicle;
63	63	(9) that the retail seller or holder will cancel all or
64	64	part of the retail buyer's obligation as provided in the debt
65	65	cancellation agreement on the occurrence of total loss or theft of
66	66	the covered vehicle;
67	67	(10) the method to be used to calculate refunds;
68	68	(11) the method for calculating the amount to be
69	69	canceled under the debt cancellation agreement on the occurrence of
70	70	total loss or theft of a covered vehicle;
71	71	(12) that purchase of a debt cancellation agreement is
72	72	not required for the retail buyer to obtain an extension of credit
73	73	and will not be a factor in the credit approval process;
74	74	(13) that in order to cancel the debt cancellation
75	75	agreement and receive a refund, the retail buyer must provide a
76	76	written request to cancel to the retail seller, the holder, or any
77	77	administrator of the agreement;
78	78	(14) that if total loss or theft of the covered vehicle
79	79	has not occurred, the retail buyer has 30 days from the date of the
80	80	contract or the issuance of the debt cancellation agreement,
81	81	whichever is later, or a longer period as provided under the debt
82	82	cancellation agreement, to cancel the debt cancellation agreement
83	83	and receive a full refund of the debt cancellation agreement fee;
84	84	(15) that the retail buyer may file a complaint with
85	85	the commissioner, and include the address, phone number, and
86	86	Internet website of the Office of Consumer Credit Commissioner; and
87	87	(16) that the holder will cancel certain amounts under
88	88	the debt cancellation agreement for total loss or theft of a covered
89	89	vehicle, in the following or substantially similar language: "YOU
90	90	WILL CANCEL CERTAIN AMOUNTS I OWE UNDER THIS CONTRACT IN THE CASE OF
91	91	A TOTAL LOSS OR THEFT OF THE COVERED VEHICLE AS STATED IN THE DEBT
92	92	CANCELLATION AGREEMENT."
93	93	SECTION 4. Sections 354.006(a), (b), (f), (g), and (h),
94	94	Finance Code, are amended to read as follows:
95	95	(a) If a retail buyer purchases a debt cancellation
96	96	agreement, the retail seller must provide to the retail buyer a true
97	97	and correct copy of the debt cancellation agreement not later than
98	98	the 10th day after the date of the contract.
99	99	(b) A holder must comply with the terms of a debt
100	100	cancellation agreement not later than the 60th day after the date of
101	101	receipt of all necessary information required by the holder or
102	102	administrator of the debt cancellation agreement to process the
103	103	request.
104	104	(f) A retail seller [holder] that offers a debt cancellation
105	105	agreement must report the sale [of] and forward the debt
106	106	cancellation agreement fee [money received on all such agreements]
107	107	to the [any] designated party as prescribed in any applicable debt
108	108	cancellation agreement [administrative services agreement,
109	109	contractual liability policy, other insurance policy, or other
110	110	specified] program documents.
111	111	(g) Until the debt cancellation agreement fee has been
112	112	forwarded to the designated party as prescribed in any applicable
113	113	debt cancellation agreement program documents, the debt
114	114	cancellation agreement fee [Money] received or held by a retail
115	115	seller [holder] or any administrator of a debt cancellation
116	116	agreement and belonging to an administrator or any insurance
117	117	company[, holder, or administrator] under the terms of a written
118	118	agreement must be held by the retail seller [holder] or
119	119	administrator in a fiduciary capacity.
120	120	(h) A retail seller that negotiates a debt cancellation
121	121	agreement and subsequently assigns the contract shall:
122	122	(1) maintain documents relating to the debt
123	123	cancellation agreement that come into the retail seller's
124	124	possession; and
125	125	(2) on request of the Office of Consumer Credit
126	126	Commissioner, cooperate in requesting and obtaining access to
127	127	documents relating to the debt cancellation agreement not in the
128	128	retail seller's possession.
129	129	SECTION 5. The heading to Section 354.007, Finance Code, is
130	130	amended to read as follows:
131	131	Sec. 354.007. REFUND OR CREDIT FOR DEBT CANCELLATION
132	132	AGREEMENTS.
133	133	SECTION 6. Sections 354.007(b), (c), (e), and (g), Finance
134	134	Code, are amended to read as follows:
135	135	(b) The refund or credit for the debt cancellation agreement
136	136	fee can be rounded to the nearest whole dollar. A refund or credit
137	137	of the debt cancellation agreement fee is not required if the amount
138	138	of the refund or credit calculated is less than $5.
139	139	(c) If total loss or theft has not occurred, the retail
140	140	buyer may cancel the debt cancellation agreement not later than the
141	141	30th day after the date of the contract or the issuance of the debt
142	142	cancellation agreement, whichever is later, or a later date as
143	143	provided under the debt cancellation agreement. On cancellation of
144	144	the debt cancellation agreement, the recipient of the debt
145	145	cancellation agreement fee [holder or any administrator of the
146	146	agreement] shall refund the entire debt cancellation agreement fee
147	147	or forward to the holder the entire debt cancellation agreement fee
148	148	to be applied as a credit under the contract [the entire debt
149	149	cancellation agreement fee]. A retail buyer may not cancel the debt
150	150	cancellation agreement and subsequently receive any benefits under
151	151	the debt cancellation agreement.
152	152	(e) If the debt cancellation agreement terminates due to the
153	153	early termination of the contract, the recipient of the debt
154	154	cancellation agreement fee [holder] shall, not later than the 60th
155	155	day after the date the debt cancellation agreement terminates, [:
156	156	[(1)] refund an appropriate amount of the debt
157	157	cancellation agreement fee to the retail buyer or forward to the
158	158	holder [credit] an appropriate amount of the debt cancellation
159	159	agreement fee to be applied as a credit under the contract [; or
160	160	[(2) cause to be refunded or credited an appropriate
161	161	amount of the debt cancellation agreement fee by providing written
162	162	instruction to the appropriate person].
163	163	(g) The recipient of the debt cancellation agreement fee
164	164	[holder] shall maintain records of any refund or credit of an amount
165	165	of a debt cancellation agreement fee made under Subsection (e) and
166	166	provide electronic access to those records until the later of the
167	167	fourth anniversary of the date of the contract or the second
168	168	anniversary of the date of the refund or credit.
169	169	SECTION 7. Chapter 354, Finance Code, is amended by adding
170	170	Section 354.008 to read as follows:
171	171	Sec. 354.008. RECORDKEEPING. The holder shall maintain
172	172	records of a debt cancellation agreement until the fourth
173	173	anniversary of the date of the contract.
174	174	SECTION 8. Sections 354.007(d) and (f), Finance Code, are
175	175	repealed.
176	176	SECTION 9. Section 354.008, Finance Code, as added by this
177	177	Act, applies only to a retail installment contract entered into on
178	178	or after the effective date of this Act. A retail installment
179	179	contract entered into before the effective date of this Act is
180	180	governed by the law in effect on the date the contract was entered
181	181	into, and the former law is continued in effect for that purpose.
182	182	SECTION 10. This Act takes effect September 1, 2019.