Print
The latest Q & A on a compliance issue, as provided by the League's General Counsel at Norman, Hanson & DeTroy.
Question: We sent a Right to Cure notice after a member defaulted in payment on her car loan. Although she made some payments, she never cured the default stated in the notice. We are going to repossess the car, but it has been more than a year since we sent her the right to cure notice. Do we have to send her another right to cure before we can repossess the car?
Answer: No. The Maine Consumer Credit Code requires that before a creditor can accelerate the debt or repossess its collateral based on a payment default, it must first send out a right to cure notice. The notice must include: "If you are late again within the next 12 months in making your payments, we may exercise our rights without sending you another notice like this one." Some credit union folks take this to mean that a right to cure is "good" for 12 months; and after 12 months, another must be sent. However, this language is referring to another default—i.e., "if you are late again." This means that if the member cures the default after the notice is sent but then fails to make payment thereafter and within 12 months of the prior default, the credit union does not need to send another notice before repossessing the car. This 12-month period is measured between dates of default rather than between dates of right to cure notices.
For more compliance news, please visit League INFOSight through the Maine CU League's website.