Honorable SamKelley               Opinion No. &766
Consumer Credit Commissioner
1011 San Jacinto                  Re:    Whether a certain plan of
P. 0.   BOX   2107                       payment to discharge prior
Austin, Texas        78767               debts of a client by inter-
                                         cession of a certain credit
                                         counseling service between the
                                         client and his debtors and
                                         creditors is in violation of
Dear Mr. Kelley:                         Article 5069-9.02, V.C.S.
     In your recent letter you request this office to render an
opinion on whether the contract of Credit Counseling of Houston,
Texas, violates Article 5069-9.02, Vernon's civil Statutes.
     Article 5069-9.02 prohibits debt pooling contracts and
provides that such contracts shall be void and of no effect.      A
debt pooling contract is defined in the following manner in
Article 5069-9.02:
              "(1) Except as provided in Article 9.03 nothing
              herein shall be construed to permit any debt pooling
              contracts wherein a contract is entered into by any
              person with a debtor by the terms of which contract
              the debtor agrees to deposit periodically or other-
              wise with such person a specified sum of money and
              said person agrees to distribute said sums of money
              among creditors of the debtor, for which service
              the debtor agrees to pay a valuable consideration.
              "(2) Any such contract as described herein shall be
              void and of no effect." (Emphasis added).
        Article 5069-9.03 further provides as follows:
              "The provisions of Article 9.02 shall not apply
              to:
              (a) Any bank, savings and loan association, trust
              company or credit union doing business under the


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.Hon. Sam Kelley, page 2   (M-766)

          laws of this State or of the United States;
           b   Any attorney at law;
           C
          [I   Any judicial officer or other person
          acting under the orders of a court of this
          State or of the United States;
          (d) Any agency, instrumentality or sub-
          division of this State or of the United States;
          (e) Any retail merchants association or non-
          profit trade association formed for the purpose
          of collecting accounts and exchanging credit
          information; and
          (f) Any non-profit organization providing debt-
          counseling services to citizens of this State."
     Article 5069-9.04 further provides as follows:
          "Any person violating Article 9.02 shall be
          guilty of a misdemeanor, and upon conviction
          shall be fined not less than One Hundred Dollars
          nor more than Five Hundred Dollars for each con-
          viction. Each act of debt pooling as defined in
          Article 9.02 shall constitute a separate offense."
     The rules of construction ap licable to Article 5069-9.01,
et seq, are set out by Article 508q-50.01. Therein it is pro-
vided, in part, that:
          "Unless specifically altered by this Act or
          unless the context requires otherwise, the
          provisions of Article 10, 11, 12, 14, 22, and
          23, Revised Civil Statutes of Texas, 1925,. . .
          apply to this Act."
Article 10 contains the general rule of construction of laws.
Sections 6 and 8 thereof are particularly relevant here and it
is our opinion that we must construe Article 5069-9.01, et seq,
more liberally than would ordinarily be the case where misdemeanor
penalties are provided.
     With these principles in mind it is clear from a reading of
the statute that the Legislature intended to prohibit debt pooling
contracts wherein a debtor, by contract, becomes obligated to
deposit with a person, periodically or otherwise, specified sums




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Hon. Sam Kelley, page 3   (M- 766)

of money, and that person agrees to distri,butesaid sums of
money among the creditors of the debtor, and the debtor further
agrees to pay valuable consideration for the service, except
where this service is provided by one of the persons expressly
enumerated in Section 9.03. In other words, those persons en-
umerated in Section 9.03 may, by contract, do that which is
otherwise prohibited by Section 9.02. Credit Counseling of
Houston, Texas, does not fall within one of the exemptions con-
tained within Section 9.03.
     Credit Counseling of Houston, Texas, operates under the
terms of the contract you have submitted with your opinion request.
Construction of that contract, in light of the facts submitted.in
your letter, presents a close question for our determination. We
are, however, constrained to hold that the tenor and purpose of
the contract, while ambiguous in some respects, does evidence an
obligation on the part of.Credit Counseling of Houston, Texas,
to effecta distribution of money to the list of creditors sub-
mitted to it by the debtor. This is part of that which is pro-
hibited by contract under Section 9.02.
     Neither the contract nor the facts submitted demonstrate
that the debtor Is required to deposit monies directly with
Credit.Counseling. On the contrary, the contract requires the
debtor to set up a bank account to which money is directed and
from which, presumably, only the debtor can.withdraw funds.
However, we are further constrained to hold that the mere artifice
of requiring, by contract, a debtor to deposit monies to one of the
persons ordinarily exempt under Section 9.03 (a bank, in this
instance) does not suffice to remove themcontract of Credit
Counseling from that express prohibition of Section 9.02. It
is the control over the debtor by persons other than those en-
umerated in Section 9.03 which we hold, under the contract and
facts submitted, the Legislature intended to prohibit. The;con-
tract, viewed inlight of the,facts submitted in your letter,
illustrates that Credit Counseling, as .a practical matter, effect-
ively controls the income of the debtor to the same extend as
where the debtor deposits money directly with and to the account
of Credit Caunseling.
     The further prohibited requirement that the debtor pay
valuable consideration for services rendered Is contained in the
contract and completely brings the contract of Credit Counseling




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Hon. Sam Kelley,    page 4   (M- 766)

within the proscription of Section 9.02.
     The scope of this ooinion is limited to an analvsis of
the written contract and-the facts submitted in your-letter.
                      SUMMARY
                      -------
         A contract between a debtor and a person not
         enumerated In Article 5069-9.03, wherein the
         person by said contract requires the debtor
         to set up a bank account from which disburse-
         ments to a list of creditors submitted to such
         person are made, and such person is, under the
         terms of that contract, obligated to work out
         a plan of disbursements to creditors, and the
         person redeives valuable consideration for the
         arrangement of the plan of payment to the
         creditors of the debtor, is a debt pooling
         contract within the terms of Article 5069-9.02,
         V.C.S., and expressly prohibifi thereby.

                                        Yc@
                                          6 very truly,
                                                   *
                                                    .
                                                z%i?A.&
                                                . MARTIN
                                                eneral of Texas
Prepared by Rex H. White, Jr.
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Kerns Taylor, Chairman
Bill Allen, Co-Chairman
John H. Banks
Roger Tyler
Jim Swearingen
Jay Floyd
Ralph Rash
MEADE F. GRIFFIN
Staff Legal As~sistant
NOLR WHITE
First Assistant
ALFREDWALKER
Executive Assistant

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