Debt cancellation agreement bill clears Texas House Committee

The committee substitute to HB 2639 by Rep. Dan Flynn (R-Van) was voted favorably from the House Pensions, Investments, and Financial Services Committee on April 18. The bill addresses an issue that can occur in indirect auto lending when a financial institution has purchased a loan from the retail seller of a vehicle and a debt cancellation agreement (DCA). If the buyer cancels the DCA, they may be entitled to a full or partial refund of the fee. 

HB 2639 makes the process of getting the refund to the consumer clear. The administrator of the DCA is to ensure the borrower receives any refund they are due. The holder, the credit union acting as an indirect lender, does not have the fee from which to issue a refund and has no power to compel the administrator to comply.

The committee substitute added a requirement that the holder must notify the administrator of the DCA in writing within 30 days of the retail buyer’s request for cancellation of the agreement. It also clarifies that the administrator of the DCA is responsible for the maintenance of and electronic access to records of any refund or credit of a DCA fee for a specified period of time.

Contact Jeff Huffman at 469-385-6488 or [email protected] for more information.