This bill was authored by Craddick, and is “relating to a limitation of total charges in connection with certain extensions of consumer credit facilitated by a credit service organization.” The bill states it is amending Texas Finance Code Chapter 393, subchapter D by adding 393.308 which states that the total charges on a arranged by CSO loan cannot exceed those outlined in Texas Finance Code Chapter 342, E & F. There are pending changes to Chapter 342 in SB 823 from Carona it is possible that this bill intends to correspond with that bill. Or, this could be a way to address the methods allegedly employed by operators to adapt to local ordinances. Currently, a maximum of either 24% APR or 80% APR is chargeable on “regulated lender loans” under Chapter 342. Credit Access Businesses (or at least that use of that exact term) are absent from this bill. HB 2019 would go into effect on 9-1-2013.

Click here for a PDF of HB 2019! HB.2019

House Bill 996 a “Debt Buyer Bill” is set to be signed by Governor Abbott.  This particular bill limits when a debt buyer can initiate legal action or arbitration to collect consumer debt. It also requires specific notices to be provided to the consumer with respect to out-of-statute debt.  The new provisions are effective Sept. 1, 2019.  Texas Credit Access Businesses definitely work with debt buyers who will need to conform to the new rules.  

Also, it would be a good idea to get some input from our friends at Kilpatrick Townsend & Stockton (https://www.kilpatricktownsend.com/) on whether any of this new bill can be applied to a Credit Access Business who takes ownership of a customer debt after they pay out the third-party lender under the guaranty arrangement.  

What is the definition of a Debt Buyer:

·         A person who purchases or otherwise acquires a consumer debt from a creditor or other subsequent owner of the consumer debt (thinking out loud, is this a CAB??), regardless of whether the person collects the consumer debt, hires a third party to collect the consumer debt, or hires an attorney to pursue collection litigation in connection with the consumer debt.

The term “Debt Buyer” does not include:

·         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

·         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.”

·         The legislation prohibits a debt buyer from bringing suit or initiating arbitration on consumer debt if the applicable statute of limitations statute of limitations on a consumer debt has expired it cannot be revived.

Consumer Notices must be provided:

With the passage of this legislation, Texas joins other jurisdictions in having to provide notices regarding the expiration of the statute of limitations. (the statute of limitations is 6 years from due date)

In Texas, one of the three required disclosures will apply depending on whether the credit reporting period has expired and whether the debt buyer credit reports.

1.      If the credit reporting period has not expired and the debt buyer does credit report this is the notice that must be sent:

“THE LAW LIMITS HOW LONG YOU CAN BE SUED ON A DEBT. BECAUSE OF THE AGE OF YOUR DEBT, WE WILL NOT SUE YOU FOR IT. IF YOU DO NOT PAY THE DEBT, [INSERT NAME OF DEBT BUYER] MAY CONTINUE TO REPORT IT TO CREDIT REPORTING AGENCIES AS UNPAID FOR AS LONG AS THE LAW PERMITS THIS REPORTING. THIS NOTICE IS REQUIRED BY LAW.”

2.      If the credit reporting period has not expired but the debt buyer does not credit report:

“THE LAW LIMITS HOW LONG YOU CAN BE SUED ON A DEBT. BECAUSE OF THE AGE OF YOUR DEBT, WE WILL NOT SUE YOU FOR IT. THIS NOTICE IS REQUIRED BY LAW.”

3.      If the credit reporting period has expired:

“THE LAW LIMITS HOW LONG YOU CAN BE SUED ON A DEBT. BECAUSE OF THE AGE OF YOUR DEBT, WE WILL NOT SUE YOU FOR IT, AND WE WILL NOT REPORT IT TO ANY CREDIT REPORTING AGENCY. THIS NOTICE IS REQUIRED BY LAW.”

The notice must be “in at least 12-point type that is boldfaced, capitalized, or underlined or otherwise conspicuously set out from the surrounding written material.”

It is important that it is mentioned that the content from this blog post was gathered  from the www.Consumerfsblog.com which is a publication of Maurice Wutscher, a financial services law firm.  Our Texas Credit Access Businesses sincerely appreciate the content which was directly cited, summarized, reorganized, and paraphrased in this post.  Here is a link to their blog / website:

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.