II

106TH CONGRESS

1ST SESSION S. 641

To amend the Truth in Lending Act to provide for enhanced information

regarding credit card balance payment terms and conditions, and to

provide for enhanced reporting of credit card solicitations to the Board

of Governors of the Federal Reserve System and to Congress, and for

other purposes.

IN THE SENATE OF THE UNITED STATES

MARCH 17, 1999

Mr. SARBANES (for himself, Mr. DURBIN, Mr. DODD, and Mr. FEINGOLD) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

A BILL

To amend the Truth in Lending Act to provide for enhanced

information regarding credit card balance payment terms

and conditions, and to provide for enhanced reporting

of credit card solicitations to the Board of Governors

of the Federal Reserve System and to Congress, and

for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Consumer Credit Act

5 of 1999’’.
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1 SEC. 2. ENHANCED DISCLOSURES UNDER AN OPEN END

2 CONSUMER CREDIT PLAN.

3 (a) REPAYMENT TERMS.—Section 127(b) of the

4 Truth in Lending Act (15 U.S.C. 1637(b)) is amended

5 by adding at the end the following:

6 ‘‘(11)(A) Repayment information that would

7 apply to the outstanding balance of the consumer

8 under the credit plan, including—

9 ‘‘(i) the required minimum monthly pay10 ment on that balance, represented as both a

11 dollar figure and as a percentage of that

12 balance;

13 ‘‘(ii) the number of months (rounded to

14 the nearest month) that it would take to pay

15 the entire amount of that balance, if the con16 sumer pays only the required minimum monthly

17 payments and if no further advances are made;

18 ‘‘(iii) the total cost to the consumer, in19 cluding interest and principal payments, of pay20 ing that balance in full, if the consumer pays

21 only the required minimum monthly payments

22 and if no further advances are made; and

23 ‘‘(iv) the monthly payment amount that

24 would be required for the consumer to eliminate

25 the outstanding balance in 36 months if no fur26 ther advances are made.
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1 ‘‘(B)(i) Subject to clause (ii), in making the dis2 closures under subparagraph (A) the creditor shall

3 apply the interest rate in effect on the date on which

4 the disclosure is made until the date on which the

5 balance would be paid in full.

6 ‘‘(ii) If the interest rate in effect on the date on

7 which the disclosure is made is a temporary rate

8 that will change under a contractual provision apply9 ing an index or formula for subsequent interest rate

10 adjustment, the creditor shall apply the interest rate

11 in effect on the date on which the disclosure is made

12 for as long as that interest rate will apply under

13 that contractual provision, and then apply an inter14 est rate based on the index or formula in effect on

15 the applicable billing date.’’.

16 (b) PUBLICATION OF MODEL FORMS.—Not later

17 than 180 days after the date of enactment of this Act,

18 the Board of Governors of the Federal Reserve System

19 shall publish model disclosure forms in accordance with

20 section 105 of the Truth in Lending Act for the purpose

21 of compliance with section 127(b)(11) of the Truth in

22 Lending Act, as added by this section.
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1 SEC. 3. CREDIT CARD SECURITY INTERESTS UNDER AN

2 OPEN END CONSUMER CREDIT PLAN.

3 (a) IN GENERAL.—Section 127 of the Truth in Lend4 ing Act (15 U.S.C. 1637) is amended by adding at the

5 end the following:

6 ‘‘(h) SECURITY INTERESTS CREATED UNDER AN

7 OPEN END CONSUMER CREDIT PLAN.—During the pe8 riod of an open end consumer credit plan, if the creditor

9 of that plan obtains a security interest in personal prop10 erty purchased using that credit plan, the creditor shall

11 provide to the consumer, at the time of purchase, a written

12 statement setting forth in a clear, conspicuous, and easy

13 to read format the following information:

14 ‘‘(1) The property in which the creditor will re15 ceive a security interest.

16 ‘‘(2) The nature of the security interest taken.

17 ‘‘(3) The method or methods of enforcement of

18 that security interest available to the creditor in the

19 event of nonpayment of the plan balance.

20 ‘‘(4) The method in which payments made on

21 the credit plan balance will be credited against the

22 security interest taken on the property.

23 ‘‘(5) The following statement: ‘This property is

24 subject to a security agreement. You must not dis25 pose of the property purchased in any way, including
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1 by gift, until the balance on this account is fully

2 paid.’ ’’.

3 (b) PUBLICATION OF MODEL FORMS.—Not later

4 than 180 days after the date of enactment of this Act,

5 the Board of Governors of the Federal Reserve System

6 shall publish model disclosure forms in accordance with

7 section 105 of the Truth in Lending Act for the purpose

8 of compliance with section 127(h) of the Truth in Lending

9 Act, as added by this section.

10 SEC. 4. STATISTICS TO BE REPORTED TO BOARD OF GOV11 ERNORS OF FEDERAL RESERVE SYSTEM AND

12 TO CONGRESS.

13 Section 127 of the Truth in Lending Act (15 U.S.C.

14 1637) is amended by adding at the end the following:

15 ‘‘(i) REPORTS TO THE BOARD AND TO CONGRESS.—

16 ‘‘(1) REPORTS TO THE BOARD.—Any creditor

17 making advances under an open end credit plan

18 shall, using model forms developed and published by

19 the Board, annually submit to the Board a report,

20 which shall include—

21 ‘‘(A) the total number of open end credit

22 plan solicitations made to consumers;

23 ‘‘(B) the total amount of credit (in dollars)

24 offered to consumers;
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1 ‘‘(C) a statement of the average interest

2 rates offered to all borrowers in each of the pre3 vious 2 years;

4 ‘‘(D) the total amount of credit granted

5 and the average interest rate granted to per6 sons under the age of 25; and

7 ‘‘(E) the total amount of debt written off

8 voluntarily and due to a bankruptcy discharge

9 in each of the 2 years preceding the date on

10 which the report is submitted.

11 ‘‘(2) REPORTS TO CONGRESS.—The Board shall

12 annually compile the information collected under

13 paragraph (1) and submit to the Committees on the

14 Judiciary of the House of Representatives and the

15 Senate, the Committee on Banking, Housing, and

16 Urban Affairs of the Senate, and the Committee on

17 Banking and Financial Services of the House of

18 Representatives, a report, which shall include—

19 ‘‘(A) aggregate data described subpara20 graphs (A) through (E) of paragraph (1) for all

21 creditors; and

22 ‘‘(B) individual data described in para23 graph (1)(A) for each of the top 50 creditors.’’.
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1 SEC. 5. CIVIL LIABILITY.

2 Section 130(a) of the Truth in Lending Act (15

3 U.S.C. 1640(a)) is amended, in the undesignated para4 graph following paragraph (4), by striking the second sen5 tence and inserting the following: ‘‘In connection with the

6 disclosures referred to in subsections (a), (b), and (h) of

7 section 127, a creditor shall have a liability determined

8 under paragraph (2) only for failing to comply with the

9 requirements of section 125, 127(a), paragraph (4), (5),

10 (6), (7), (8), (9), (10), or (11) of section 127(b), or section

11 127(h), or for failing to comply with disclosure require12 ments under State law for any term or item that the

13 Board has determined to be substantially the same in

14 meaning under section 111(a)(2) as any of the terms or

15 items referred to in section 127(a), paragraph (4), (5),

16 (6), (7), (8), (9), (10), or (11) of section 127(b), or section

17 127(h).’’.

18 SEC. 6. TREATMENT UNDER BANKRUPTCY LAW.

19 (a) EXCEPTIONS TO DISCHARGE.—Section 523(a) of

20 title 11, United States Code, is amended by adding at the

21 end the following:

22 ‘‘The exception under subparagraphs (A) and (C) of

23 paragraph (2) shall not apply to any claim made by

24 a creditor who has failed to make the disclosures re25 quired under section 127(h) of the Truth in Lending

26 Act in connection with such claim, unless a creditor
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1 required to make such disclosures files with the

2 court, within 90 days of the date of order for relief,

3 a proof of claim accompanied by a copy of such dis4 closures that is signed and dated by the debtor.’’.

5 (b) REAFFIRMATION.—Section 524(c) of title 11,

6 United States Code, is amended—

7 (1) in paragraph (5), by striking ‘‘and’’ at the

8 end;

9 (2) in paragraph (6), by striking the period at

10 the end and inserting ‘‘; and’’; and

11 (3) by adding at the end the following:

12 ‘‘(7) in a case concerning a creditor obligated to

13 make the disclosures required under section 127(h)

14 of the Truth in Lending Act, the agreement contains

15 a copy of such disclosures that is signed and dated

16 by the debtor.’’.

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