Introduced House Bill (H)

Authored by

DIGEST

Uniform Consumer Credit Code. Makes the following changes to the Uniform Consumer Credit Code (UCCC): (1) Repeals a provision specifying a reference base index for use by the department of financial institutions (department) in adjusting specified dollar amounts designated as subject to change throughout the UCCC. (2) Replaces: (A) the tiered credit service charge authorized for consumer credit sales; and (B) the 25% loan finance charge authorized for consumer loans; with a flat charge of 36% per year on the unpaid balances. (3) Increases the: (A) minimum credit service charge for consumer credit sales; and (B) minimum loan finance charge Uniform Consumer Credit Code. Makes the following changes to the Uniform Consumer Credit Code (UCCC): (1) Repeals a provision specifying a reference base index for use by the department of financial institutions (department) in adjusting specified dollar amounts designated as subject to change throughout the UCCC. (2) Replaces: (A) the tiered credit service charge authorized for consumer credit sales; and (B) the 25% loan finance charge authorized for consumer loans; with a flat charge of 36% per year on the unpaid balances. (3) Increases the: (A) minimum credit service charge for consumer credit sales; and (B) minimum loan finance charge for consumer loans; from $30 (subject to indexing) to $50 (not subject to indexing). (4) Replaces the authorized $5 delinquency charge (subject to indexing) for consumer credit sales and consumer loans with a nonindexed delinquency charge of: (A) $5 if installments are due every 14 days or less; (B) $25 if installments are due every 15 days or more; or (C) $25, in the case of a single installment due at least 30 days after the consumer credit sale or consumer loan is made. (5) Specifies that a creditor may not charge or collect a delinquency charge on a payment that: (A) is paid within 10 days after its scheduled due date; and (B) is otherwise a full payment of the payment due for the applicable installment period; if the only delinquency with respect to a consumer credit sale or a consumer loan is attributable to a delinquency charge assessed on an earlier installment. (6) Provides that a seller in a consumer credit sale may take a security interest in goods sold if the debt secured is at least $1,500 (not subject to indexing), versus $300 (subject to indexing) in current law. (7) Changes the authorized nonrefundable prepaid finance charge for consumer loans not secured by an interest in land from a flat charge of $50 to: (A) $150 for loans with a principal amount of less than $5,000; or (B) $250 for loans with a principal amount of at least $5,000. (8) Increases the number of nonrefundable prepaid finance charges that a lender may assess in any 12 month period from two to three. (9) Repeals: (A) the definition of "supervised loan"; and (B) the provision establishing the authorized loan finance charge for supervised loans. Makes conforming amendments throughout the UCCC and the Indiana Code. (10) Provides that for a consumer loan: (A) with a loan finance charge greater than 25%; and (B) in which the principal is $4,000 or less (not subject to indexing); a lender may not contract for an interest in land as security. (Current law prohibits a lender from contracting for an interest in land as security if the loan principal is $4,000 or less (subject to indexing) without regard to the loan's finance charge.) (11) Provides that consumer loans having a loan finance charge exceeding 25% and in which the principal is $4,000 or less are payable over a period of not more than: (A) 37 months if the principal is more than $1,100 (versus $300, subject to indexing, in current law) but not more than $4,000; or (B) 25 months if the principal is $1,100 (versus $300, subject to indexing, in current law) or less. (Current law specifies these maximum loan terms for loans with a principal amount of $4,000 or less (subject to indexing) without regard to the loan's finance charge.) (12) Provides that a creditor in a consumer loan transaction may not contract for or receive a separate charge for property casualty insurance unless the amount financed exclusive of charges for the insurance is at least $1,000 (versus $300, subject to indexing, in current law), and the value of the property is at least $1,000 (versus $300, subject to indexing, in current law). (13) Authorizes a lender that is licensed to make small loans under the UCCC to make unsecured consumer loans under the same license. (14) Adds to the UCCC chapter governing small loans the repealed provision specifying a reference base index for use by the department in adjusting specified dollar amounts designated as subject to change, so that the indexing provisions apply only to provisions governing small loans and the newly authorized unsecured consumer loans. (15) Defines an "unsecured consumer loan" as a loan: (A) with a principal amount of more than $550 and not more than $1,500; and (B) in which the lender holds the borrower's check for a specific period, or receives the borrower's authorization to debit the borrower's account for a specific period, before the lender: (i) offers the check for deposit or presentment; or (ii) debits the account. (16) Establishes the following with respect to unsecured consumer loans: (A) An authorized finance charge, interest rate, and monthly maintenance fee. (B) A $25 returned check fee. (C) Mandatory consumer disclosures. (D) Requirements concerning the loan term, consecutive unsecured consumer loans, and extended payment plans. (E) Lending prohibitions based on a borrower's monthly gross income. (F) Provisions concerning a lender's duties upon payments made by a borrower. (G) Limits on the number and amount of a borrower's outstanding loans, including a prohibition against a borrower being obligated under a small loan agreement and an unsecured consumer loan agreement at the same time. (H) Permissible and prohibited remedies upon a borrower's default. (I) Remedies and damages for violations by licensees and unlicensed persons. (J) Prohibited acts by a lender. (K) Surety bond requirements for lenders. (17) Provides that for each small loan or unsecured consumer loan made by a lender, the lender shall remit to the director of the department a $5 fee for use by the director in developing and promoting financial literacy programs. (18) Prohibits a lender from passing the fee onto borrowers. (19) Provides that after June 30, 2020, a borrower who takes out a total of more than: (A) three small loans; or (B) three unsecured consumer loans; in any 24 month period must take a financial literacy course approved by the department. Provides that the course must be available at no cost to the borrower and may be funded, in whole or in part, by the $5 fee assessed on lenders. (20) Requires a lender to disclose information on the following to a borrower entering into a small loan or an unsecured consumer loan: (A) The availability of the 211 telephone dialing code for access to human services information and referrals. (B) The financial literacy course required after June 30, 2020, for borrowers who have taken out a total of more than three small loans or three unsecured consumer loans in any 24 month period, including contact information for the department. ... View more