House Study Bill 218 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON COWNIE) A BILL FOR An Act relating to consumer lawsuit lending transactions, and 1 including effective date provisions. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 2494YC (2) 85 rn/sc
H.F. _____ Section 1. Section 537.1301, subsection 27, paragraph a, 1 Code 2013, is amended by adding the following new subparagraph: 2 NEW SUBPARAGRAPH . (6) (a) The provision of a cash advance 3 or funds to a consumer in exchange for that consumer assigning, 4 conveying, or otherwise conferring to the person or entity 5 advancing the cash advance or funds the right to receive 6 the proceeds, or a part of the proceeds, of the settlement, 7 insurance payment, or award of damages obtained in either of 8 the following: 9 (i) A consumer’s civil action, or statutory or regulatory 10 claim, for which damages may be awarded to the consumer or 11 claiming party. 12 (ii) A cause of action or legal claim upon which a civil 13 action or statutory claim described in subparagraph subdivision 14 (i) may be based, regardless of whether the right to receive 15 the proceeds is nonrecourse. 16 (b) For purposes of this subparagraph, “nonrecourse” 17 means the consumer or the consumer’s members, partners, or 18 shareholders, if any, or any related person to a member, 19 partner, or shareholder, does not bear the risk of financial 20 loss to the person or entity advancing a cash advance or funds. 21 Sec. 2. Section 537.1301, subsection 27, paragraph b, Code 22 2013, is amended by adding the following new subparagraph: 23 NEW SUBPARAGRAPH . (3) Providing professional legal 24 services or the advancement of litigation expenses by 25 an attorney licensed to practice law in this state to an 26 individual on a contingency basis. 27 Sec. 3. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 28 immediate importance, takes effect upon enactment. 29 EXPLANATION 30 This bill expands the definition of a “loan” for purposes 31 of Code chapter 537, the consumer credit code, to include 32 providing a cash advance or funds to a consumer in exchange for 33 that consumer assigning, conveying, or otherwise conferring to 34 the person or entity advancing the cash advance or funds the 35 -1- LSB 2494YC (2) 85 rn/sc 1/ 2
H.F. _____ right to receive the proceeds, or a part of the proceeds, of 1 the settlement, insurance payment, or award of damages obtained 2 under specified circumstances. Those circumstances include a 3 consumer’s civil action, or statutory or regulatory claim, for 4 which damages may be awarded to the consumer or claiming party, 5 or a cause of action or legal claim upon which a civil action 6 or statutory or regulatory claim may be based, regardless of 7 whether the right to receive the proceeds pursuant to the 8 cause of action or legal claim is nonrecourse. The bill 9 defines “nonrecourse” to mean that the consumer or its members, 10 partners, or shareholders, if any, or any related person to 11 a member, partner, or shareholder, does not bear the risk of 12 financial loss to the person or entity advancing a cash advance 13 or funds. 14 Additionally, the bill provides that providing professional 15 legal services or the advancement of litigation expenses by an 16 attorney licensed to practice law in Iowa to an individual on a 17 contingency basis shall not be considered a “loan” for purposes 18 of Code chapter 537. 19 The bill takes effect upon enactment. 20 -2- LSB 2494YC (2) 85 rn/sc 2/ 2