This section limits delinquency charges on consumer credit payments and sets conditions for converting certain delinquent precomputed loans to simple interest.
§3527. Maximum delinquency charges; notice of conversion A. The parties to a consumer credit transaction may contract for the payment of a delinquency charge on any installment or other regular payment not paid in full within ten days after its scheduled or deferred due date in either one of the following amounts: (1) Five percent of the unpaid amount of the delinquent installment, or ten dollars, whichever is greater. (2) The deferral charge that would be permitted to defer the unpaid amount of the installment or other regular payment for the period that it is delinquent. B. The parties to a revolving loan account or lender credit card account may contract for the payment of a delinquency charge not to exceed fifteen dollars on any regularly scheduled payment not paid in full within ten days of the payment due date. C.(1) A delinquency charge may be collected only once on an installment or other payment however long it remains delinquent. No such delinquency charge may be collected if the installment or other payment has been deferred and a deferral charge has been paid or incurred, provided that the deferred payment is paid within ten days of its deferred date. Such a delinquency charge may be collected at the time it accrues or at any time thereafter. (2) No such delinquency charge may be collected on an installment or other regular payment that is paid in full within ten days after its scheduled due date even though an earlier maturing installment, other payment, or delinquency charge on an earlier installment or other payment may not have been paid in full. For purposes of determining delinquency, payments are deemed to be applied first to current installments or other payments due and then to delinquent installments or other payments and then to delinquent and other charges. (3) An extender of credit is prohibited from levying or collecting any delinquency charge on a payment when the only delinquency is attributable to late fees or delinquency charges assessed on earlier installments, and the payment is otherwise a full payment for the applicable period and is paid on its due date or within an applicable grace period. (4) Nothing in this Subsection shall be construed to prohibit the extender of credit from assessing and collecting a finance charge on any delinquency or deferral charges not paid when due. Such finance charges shall not exceed the contract rate charged on the consumer transaction. D. If two installments or other regular payments or parts thereof of a precomputed consumer credit transaction are in default for ten days or more, the extender of credit may, upon first giving the consumer written notice, elect to convert the precomputed consumer credit transaction into a simple interest transaction. The notice must state the exact date on which the conversion will occur, the interest rate to be charged under the simple interest transaction, the balance due on the loan at the time of the conversion, and whether or not there will be a balloon payment. In this event he shall make a rebate pursuant to the provisions on rebate upon prepayment as of the maturity date of a delinquent installment or other regular payment, and thereafter may make a loan finance charge or credit service charge as authorized by this Part. The amount of the rebate shall not be reduced by the amount of any minimum loan finance charge or minimum credit service charge as provided in R.S. 9:3519(E) and 3520(B); however, the extender of credit may deduct a prepayment charge as provided in R.S. 9:3532. E. A creditor may contractually reserve the right to prospectively increase the simple interest rate under a consumer loan transaction upon or at any time following the borrower's default. However, such a default interest rate shall not exceed the loan finance charge rate or rates authorized under R.S. 9:3519(A). Added by Acts 1972, No. 454, §1, eff. Jan. 1, 1973. Amended by Acts 1980, No. 694, §1; Acts 1982, No. 370, §1; Acts 1986, No. 584, §1, eff. July 2, 1986; Acts 1988, No. 629, §1; Acts 1993, No. 726, §1; Acts 1995, No. 1184, §2; Acts 1997, No. 227, §1; Acts 1997, No. 1033, §1; Acts 2003, No. 337, §2; Acts 2004, No. 763, §1, eff. July 6, 2004.