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A BILL TO BE ENTITLED
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AN ACT
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relating to the collection of consumer debt by debt buyers. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. This Act shall be known as the Fair Consumer Debt |
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Collection Act. |
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SECTION 2. Subchapter D, Chapter 392, Finance Code, is |
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amended by adding Section 392.307 to read as follows: |
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Sec. 392.307. COLLECTION OF CERTAIN DEBT BY DEBT BUYERS. |
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(a) In this section: |
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(1) "Charged-off debt" means a consumer debt that a |
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creditor has determined to be a loss or expense to the creditor |
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instead of an asset. |
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(2) "Debt buyer" means a person who purchases or |
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otherwise acquires a consumer debt from a creditor or other |
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subsequent owner of the consumer debt, regardless of whether the |
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person collects the consumer debt, hires a third party to collect |
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the consumer debt, or hires an attorney for collection litigation |
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in connection with the consumer debt. The term does not include: |
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(A) a person who acquires a charged-off debt |
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incidental to the purchase of a portfolio that predominantly |
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consists of consumer debt that has not been charged off; or |
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(B) a check services company that acquires the |
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right to collect on a paper or electronic negotiable instrument, |
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including an Automated Clearing House (ACH) authorization to debit |
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an account that has not been processed. |
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(3) "Statute of limitations" means a law in this state |
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that prescribes the period during which a person may bring a cause |
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of action. |
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(b) Unless otherwise expressly provided, this section |
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prevails to the extent of any conflict between this section and any |
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other law of this state. |
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(c) A debt buyer may not, directly or indirectly, commence |
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an action against or initiate arbitration with a consumer to |
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collect a consumer debt later than the earlier of: |
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(1) the fourth anniversary of the date of the |
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consumer's last activity on the consumer debt; or |
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(2) the expiration date of any applicable statute of |
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limitations. |
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(d) A cause of action against a consumer for collection of a |
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consumer debt that is barred under Subsection (c) may not be revived |
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by a payment of the consumer debt, an oral or written reaffirmation |
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of the consumer debt, or any other activity on the consumer debt. |
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(e) If a debt buyer is engaged in debt collection for a |
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consumer debt for which a cause of action is barred under Subsection |
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(c), the debt buyer, or a debt collector acting on behalf of the |
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debt buyer, shall provide the following notice in the initial |
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written communication with the consumer relating to debt |
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collection: |
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(1) if the reporting period for including the consumer |
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debt in a consumer report prepared by a consumer reporting agency |
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has not expired under Section 605, Fair Credit Reporting Act (15 |
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U.S.C. Section 1681c), and the debt buyer furnishes to consumer |
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reporting agencies information regarding the consumer debt, "THE |
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LAW LIMITS HOW LONG YOU CAN BE SUED ON A DEBT. BECAUSE OF THE AGE OF |
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YOUR DEBT, WE WILL NOT SUE YOU FOR IT. IF YOU DO NOT PAY THE DEBT, |
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[INSERT NAME OF DEBT BUYER] MAY CONTINUE TO REPORT IT TO THE CREDIT |
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REPORTING AGENCIES AS UNPAID FOR AS LONG AS THE LAW PERMITS THIS |
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REPORTING. THIS NOTICE IS REQUIRED BY LAW."; |
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(2) if the reporting period for including the consumer |
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debt in a consumer report prepared by a consumer reporting agency |
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has not expired under Section 605, Fair Credit Reporting Act (15 |
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U.S.C. Section 1681c), but the debt buyer does not furnish to |
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consumer reporting agencies information regarding the consumer |
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debt, "THE LAW LIMITS HOW LONG YOU CAN BE SUED ON A DEBT. BECAUSE OF |
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THE AGE OF YOUR DEBT, WE WILL NOT SUE YOU FOR IT. THIS NOTICE IS |
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REQUIRED BY LAW."; or |
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(3) if the reporting period for including the consumer |
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debt in a consumer report prepared by a consumer reporting agency |
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has expired under Section 605, Fair Credit Reporting Act (15 U.S.C. |
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Section 1681c), "THE LAW LIMITS HOW LONG YOU CAN BE SUED ON A DEBT. |
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BECAUSE OF THE AGE OF YOUR DEBT, WE WILL NOT SUE YOU FOR IT, AND WE |
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WILL NOT REPORT IT TO ANY CREDIT REPORTING AGENCY. THIS NOTICE IS |
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REQUIRED BY LAW." |
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(f) A notice required under Subsection (e) must be in at |
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least 12-point type that is boldfaced, capitalized, or underlined |
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or otherwise conspicuously set out from the surrounding written |
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material. |
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SECTION 3. Section 392.402, Finance Code, is amended by |
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adding Subsection (d) to read as follows: |
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(d) This section does not apply to a violation of Section |
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392.307. |
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SECTION 4. Section 392.404(a), Finance Code, is amended to |
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read as follows: |
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(a) A violation of this chapter is a deceptive trade |
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practice under Subchapter E, Chapter 17, Business & Commerce Code, |
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and is actionable under that subchapter. This subsection does not |
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apply to a violation of Section 392.307. |
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SECTION 5. The changes in law made by this Act apply only to |
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an action of a debt buyer to collect a consumer debt if the action |
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occurs on or after the effective date of this Act. An action of a |
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debt buyer to collect a consumer debt that occurs before the |
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effective date of this Act is governed by the law in effect |
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immediately before that date, and the former law is continued in |
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effect for that purpose. |
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SECTION 6. This Act takes effect December 1, 2017. |