Bill Text: TX SB1586 | 2019-2020 | 86th Legislature | Introduced

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Bill Title: Relating to debt cancellation agreements offered in connection with certain retail installment contracts.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2019-03-14 - Referred to Business & Commerce [SB1586 Detail]

Download: Texas-2019-SB1586-Introduced.html

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86R8982 ATP-F
By: Hughes S.B. No. 1586

A BILL TO BE ENTITLED
AN ACT
relating to debt cancellation agreements offered in connection with
certain retail installment contracts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 354.001, Finance Code, is amended by
adding Subdivision (3-a) to read as follows:
(3-a) "Debt cancellation agreement fee" means the
amount charged for a debt cancellation agreement made in connection
with a contract.
SECTION 2. Section 354.002(b), Finance Code, is amended to
read as follows:
(b) The debt cancellation agreement fee [amount charged for
a debt cancellation agreement made in connection with a contract]
may not exceed five percent of the amount financed pursuant to the
contract. Section 348.124(c) does not apply to a debt cancellation
agreement regulated under this chapter.
SECTION 3. Section 354.004, Finance Code, is amended to
read as follows:
Sec. 354.004. REQUIRED DEBT CANCELLATION AGREEMENT
LANGUAGE. A debt cancellation agreement must state:
(1) the contact information of the retail seller, the
holder, and any administrator of the debt cancellation agreement;
(2) the name and address of the retail buyer;
(3) the cost and term of the debt cancellation
agreement;
(4) the procedure the retail buyer must follow to
obtain benefits under the terms of the debt cancellation agreement,
including a telephone number and address where the retail buyer may
provide notice under the debt cancellation agreement;
(5) the period during which the retail buyer is
required to notify the retail seller, the holder, or any
administrator of the agreement of any potential loss under the debt
cancellation agreement for total loss or theft of the covered
vehicle;
(6) that in order to make a claim, the retail buyer
must provide or complete some or all of the following documents and
provide those documents to the retail seller, the holder, or any
administrator of the agreement:
(A) a debt cancellation request form;
(B) proof of loss and settlement payment from the
retail buyer's primary comprehensive, collision, or uninsured or
underinsured motorist policy or other parties' liability insurance
policy for the settlement of the insured total loss of the covered
vehicle;
(C) verification of the retail buyer's primary
insurance deductible;
(D) a copy of any police report filed in
connection with the total loss or theft of the covered vehicle; and
(E) a copy of the damage estimate;
(7) that documentation not described by Subdivision
(6) or required by the retail seller, the holder, or any
administrator of the agreement is not required to substantiate the
loss or determine the amount of debt to be canceled;
(8) that notwithstanding the collection of the
documents under Subdivision (6), on reasonable advance notice the
retail seller, the holder, or any administrator of the agreement
may inspect the retail buyer's covered vehicle;
(9) that the retail seller or holder will cancel all or
part of the retail buyer's obligation as provided in the debt
cancellation agreement on the occurrence of total loss or theft of
the covered vehicle;
(10) the method to be used to calculate refunds;
(11) the method for calculating the amount to be
canceled under the debt cancellation agreement on the occurrence of
total loss or theft of a covered vehicle;
(12) that purchase of a debt cancellation agreement is
not required for the retail buyer to obtain an extension of credit
and will not be a factor in the credit approval process;
(13) that in order to cancel the debt cancellation
agreement and receive a refund, the retail buyer must provide a
written request to cancel to the retail seller, the holder, or any
administrator of the agreement;
(14) that if total loss or theft of the covered vehicle
has not occurred, the retail buyer has 30 days from the date of the
contract or the issuance of the debt cancellation agreement,
whichever is later, or a longer period as provided under the debt
cancellation agreement, to cancel the debt cancellation agreement
and receive a full refund of the debt cancellation agreement fee;
(15) that the retail buyer may file a complaint with
the commissioner, and include the address, phone number, and
Internet website of the Office of Consumer Credit Commissioner; and
(16) that the holder will cancel certain amounts under
the debt cancellation agreement for total loss or theft of a covered
vehicle, in the following or substantially similar language: "YOU
WILL CANCEL CERTAIN AMOUNTS I OWE UNDER THIS CONTRACT IN THE CASE OF
A TOTAL LOSS OR THEFT OF THE COVERED VEHICLE AS STATED IN THE DEBT
CANCELLATION AGREEMENT."
SECTION 4. Sections 354.006(a), (b), (f), (g), and (h),
Finance Code, are amended to read as follows:
(a) If a retail buyer purchases a debt cancellation
agreement, the retail seller must provide to the retail buyer a true
and correct copy of the debt cancellation agreement not later than
the 10th day after the date of the contract.
(b) A holder must comply with the terms of a debt
cancellation agreement not later than the 60th day after the date of
receipt of all necessary information required by the holder or
administrator of the debt cancellation agreement to process the
request.
(f) A retail seller [holder] that offers a debt cancellation
agreement must report the sale [of] and forward the debt
cancellation agreement fee [money received on all such agreements]
to the [any] designated party as prescribed in any applicable debt
cancellation agreement [administrative services agreement,
contractual liability policy, other insurance policy, or other
specified] program documents.
(g) Until the debt cancellation agreement fee has been
forwarded to the designated party as prescribed in any applicable
debt cancellation agreement program documents, the debt
cancellation agreement fee [Money] received or held by a retail
seller [holder] or any administrator of a debt cancellation
agreement and belonging to an administrator or any insurance
company[, holder, or administrator] under the terms of a written
agreement must be held by the retail seller [holder] or
administrator in a fiduciary capacity.
(h) A retail seller that negotiates a debt cancellation
agreement and subsequently assigns the contract shall:
(1) maintain documents relating to the debt
cancellation agreement that come into the retail seller's
possession; and
(2) on request of the Office of Consumer Credit
Commissioner, cooperate in requesting and obtaining access to
documents relating to the debt cancellation agreement not in the
retail seller's possession.
SECTION 5. The heading to Section 354.007, Finance Code, is
amended to read as follows:
Sec. 354.007. REFUND OR CREDIT FOR DEBT CANCELLATION
AGREEMENTS.
SECTION 6. Sections 354.007(b), (c), (e), and (g), Finance
Code, are amended to read as follows:
(b) The refund or credit for the debt cancellation agreement
fee can be rounded to the nearest whole dollar. A refund or credit
of the debt cancellation agreement fee is not required if the amount
of the refund or credit calculated is less than $5.
(c) If total loss or theft has not occurred, the retail
buyer may cancel the debt cancellation agreement not later than the
30th day after the date of the contract or the issuance of the debt
cancellation agreement, whichever is later, or a later date as
provided under the debt cancellation agreement. On cancellation of
the debt cancellation agreement, the recipient of the debt
cancellation agreement fee [holder or any administrator of the
agreement] shall refund the entire debt cancellation agreement fee
or forward to the holder the entire debt cancellation agreement fee
to be applied as a credit under the contract [the entire debt
cancellation agreement fee]. A retail buyer may not cancel the debt
cancellation agreement and subsequently receive any benefits under
the debt cancellation agreement.
(e) If the debt cancellation agreement terminates due to the
early termination of the contract, the recipient of the debt
cancellation agreement fee [holder] shall, not later than the 60th
day after the date the debt cancellation agreement terminates, [:
[(1)] refund an appropriate amount of the debt
cancellation agreement fee to the retail buyer or forward to the
holder [credit] an appropriate amount of the debt cancellation
agreement fee to be applied as a credit under the contract [; or
[(2) cause to be refunded or credited an appropriate
amount of the debt cancellation agreement fee by providing written
instruction to the appropriate person].
(g) The recipient of the debt cancellation agreement fee
[holder] shall maintain records of any refund or credit of an amount
of a debt cancellation agreement fee made under Subsection (e) and
provide electronic access to those records until the later of the
fourth anniversary of the date of the contract or the second
anniversary of the date of the refund or credit.
SECTION 7. Chapter 354, Finance Code, is amended by adding
Section 354.008 to read as follows:
Sec. 354.008. RECORDKEEPING. The holder shall maintain
records of a debt cancellation agreement until the fourth
anniversary of the date of the contract.
SECTION 8. Sections 354.007(d) and (f), Finance Code, are
repealed.
SECTION 9. Section 354.008, Finance Code, as added by this
Act, applies only to a retail installment contract entered into on
or after the effective date of this Act. A retail installment
contract entered into before the effective date of this Act is
governed by the law in effect on the date the contract was entered
into, and the former law is continued in effect for that purpose.
SECTION 10. This Act takes effect September 1, 2019.