To prohibit confessions of judgment in connection with the extension of covered credit or creation of covered debt, and for other purposes.

I 116TH CONGRESS 2D SESSION H. R. 6795 To prohibit confessions of judgment in connection with the extension of covered credit or creation of covered debt, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 8, 2020 Ms. VELA´ZQUEZ (for herself and Ms. WATERS) introduced the following bill; which was referred to the Committee on Financial Services A BILL To prohibit confessions of judgment in connection with the extension of covered credit or creation of covered debt, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. CONFESSIONS OF JUDGMENT PROHIBITION. 3 (a) IN GENERAL.—During the covered period, in con- 4 nection with an extension of covered credit or the creation 5 of a covered debt in or affecting commerce (including any 6 advance of funds or sale or assignment of future income 7 or receivables that may or may not be credit), no person 8 may directly or indirectly take or receive from another per- 9 son, or seek to enforce, an obligation that constitutes or 10 VerDate Sep 11 2014 18:47 May 21, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H6795.IH H6795 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 6795 IH contains a cognovit or confession of judgment (for pur- 1 poses other than executory process in the State of Lou- 2 isiana), warrant of attorney, or other waiver of the right 3 to notice and the opportunity to be heard in the event of 4 suit or process thereon. 5 (b) ENFORCEMENT.—Any person who fails to comply 6 with the requirements of this section with respect to any 7 obligation owed by a covered borrower shall— 8 (1) be held liable under section 813 of the Fair 9 Debt Collection Practices Act (15 U.S.C. 1692k) 10 where— 11 (A) the covered borrower is deemed to be 12 a ‘‘consumer’’, as defined in section 803 of such 13 Act; and 14 (B) the person is deemed to be a ‘‘debt col- 15 lector’’, as defined in such section; and 16 (2) be liable to the covered borrower in an 17 amount equal to 10 times the maximum amount of 18 damages allowed under section 813 of such Act for 19 each violation of the requirements of this section. 20 (c) CONSIDERATION.—At the end of the covered pe- 21 riod, a person to whom an obligation described in sub- 22 section (a) is owed shall take into consideration the finan- 23 cial situation of the covered borrower that owes such obli- 24 gation for the repayment of such obligation. 25 VerDate Sep 11 2014 18:47 May 21, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H6795.IH H6795 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 6795 IH (d) DEFINITIONS.—In this section: 1 (1) COMMERCE.—The term ‘‘commerce’’ has 2 the meaning given in section 4 of the Federal Trade 3 Commission Act (15 U.S.C. 44). 4 (2) COVERED BORROWER.—The term ‘‘covered 5 borrower’’ means a person that— 6 (A) receives credit or an advance of funds; 7 or 8 (B) makes an assignment of future income 9 or receivables. 10 (3) COVERED CREDIT.—The term ‘‘covered 11 credit’’ means credit provided to a covered borrower 12 in an amount that is less than or equal to 13 $2,000,000. 14 (4) COVERED DEBT.—The term ‘‘covered debt’’ 15 means any obligation of a covered borrower to pay 16 to another person an amount that is less than or 17 equal to $2,000,000— 18 (A) regardless of whether such obligation 19 is absolute or contingent if the understanding 20 between the parties is that any part of such 21 amount shall be or may be returned; 22 (B) that includes the right of the person 23 providing the money to an equitable remedy for 24 VerDate Sep 11 2014 18:47 May 21, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H6795.IH H6795 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 6795 IH breach of performance if the breach gives rise 1 to a right to payment; and 2 (C) regardless of whether the obligation or 3 right to an equitable remedy described in sub- 4 paragraph (B) has been reduced to judgment, 5 fixed, contingent, matured, unmatured, dis- 6 puted, undisputed, secured, or unsecured. 7 (5) COVERED PERIOD.—The term ‘‘covered pe- 8 riod’’ means the period beginning on the date of the 9 enactment of this section and ending 120 days after 10 the end of the incident period for the emergency de- 11 clared on March 13, 2020, by the President under 12 Section 501 of the Robert T. Stafford Disaster Re- 13 lief and Emergency Assistance Act (42 U.S.C. 4121 14 et seq.) relating to the Coronavirus Disease 2019 15 (COVID–19) pandemic. 16 Æ VerDate Sep 11 2014 18:47 May 21, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6301 E:\BILLS\H6795.IH H6795 pamtmann on DSKBC07HB2PROD with BILLS