House of Representatives

SB 1006

deferred presentment; military service members

Sponsor: Senator Waring

 

DPA

Committee on Public Institutions & Retirement

DP

Committee on Counties, Municipalities & Military Affairs

DPA

Caucus and COW

X

As Transmitted to the Governor

 

 

SB 1006 establishes requirements for deferred presentment loans to military customers or their spouses.

 

History

Deferred presentment, also known as payday lending, is a service that offers short-term loans on amounts based on a personal check held for future deposit. A person may write a check, dated in the future, for the loan amount and a finance charge. At the end of the loan period, the person may redeem the check with cash or the licensee may deposit the check for the face amount. If the person cannot afford to pay the check, the loan may be renewed by paying an additional fee.

 

Current law requires a check accepted by a payday lending establishment to be at least $50 and not more than $500, excluding permitted fees.  The loan may not be renewed more than three consecutive times.  The licensee and customer are required to sign an agreement specifying the terms of the loan. A new written agreement is required for each loan extension.  The licensee may use all available civil remedies to collect on a check, including the imposition of a $25.00 dishonored check fee.

 

Provisions

·          Requires a licensee to provide a written statement to a military customer or the military customer’s spouse that clearly and conspicuously states the military lending practices before engaging in a deferred presentment transaction.

·          Outlines military lending practices as follows:

  1. A licensee cannot garnish military wages or salary.
  2. A licensee cannot conduct any collection activity against a military customer or military spouse during deployment to combat or combat support posting or during active duty by a member of the National Guard or any military reserve unit.
  3. A licensee must contact the employer of a military customer about a deferred presentment debt of the military customer or military spouse, but clarifies the contact shall only be a notice for informational purposes and not an attempt to collect on a deferred presentment loan through the military customer’s chain of command.
  4.  A licensee cannot conduct a deferred presentment transaction in any location prohibited by the commanding officer.
  5. Binds a licensee to the terms of any repayment agreement that is negotiated through military counselors or third party credit counselors.

·          Prohibits military customers or military spouses from extending deferred presentment loans.

·          Makes a technical and conforming change.

 

 

 

 

 

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Forty-seventh Legislature

Second Regular Session        2          June 13, 2006

 

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