Texas Passes Bill Targeting Debt Cancellation Agreements

On June 17, Texas Governor Rick Perry signed into law H.B. 2931, which adds a new subchapter to the Texas Finance Code (Code) relating to debt cancellation agreements made in connection with retail installment contracts that include insurance coverage as part of a retail buyer’s responsibility to the holder. Among other things, the bill sets forth mandatory agreement provisions and requires all agreements to be submitted to the Texas Office of the Consumer Credit Commissioner for prior approval. The bill also enumerates requirements and restrictions applicable to the refunding of a debt cancellation agreement fee. H.B. 2931 takes effect on September 1, 2011.