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#183643 - 04/26/04 02:29 PM Is notice required for a change in late fee?
Anonymous
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Our loan TIL disclosures state the dollar amount of the late fee in effect when the loan is granted, but they also state that the amount may change pursuant to Indiana Code to always be the maximum allowed by law. If we want to increase our fee when the Indiana Code limit increases on 7/1/04 do we need to give advance notice to the customer or have we already covered this because of the sentence on our TIL disclosure?

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#183644 - 04/26/04 03:12 PM Re: Is notice required for a change in late fee?
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
There is really no "notice" requirement that I'm aware of (but I haven't searched the code) as long you have the proper language in your contracts.

HOWEVER, if you issue payment books I think it would be highly advisable to issue new payment books that reflects the current late charge, and if you do statement billings a statement notice reflecting the change would not be that difficult.

I think you would rather let them know now what they need to pay instead of surprising them when they payoff the loan - "Oh by the way we increased your late charges back in XX/XX and you still owe us $X."
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The opinions expressed are mine and they are not to be taken as legal advice.

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#183645 - 04/26/04 04:14 PM Re: Is notice required for a change in late fee?
Anonymous
Unregistered

Thank you. In our case, if there is a late charge it will show up on the monthly statement, so they will know the amount, but it wouldn't hurt to go ahead and put a notice in the message section of the statement in June or July to let them know.

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#183646 - 05/10/04 04:39 PM Re: Is notice required for a change in late fee?
DDB Offline
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DDB
Joined: Oct 2003
Posts: 170
Quote:

There is really no "notice" requirement that I'm aware of (but I haven't searched the code) as long you have the proper language in your contracts.




Even if there is no notice requirement under the Indiana Code, does the statement in the contract cover the 15 day advance notice requirement under Regulation Z for changes in terms?
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#183647 - 05/10/04 06:35 PM Re: Is notice required for a change in late fee?
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
This is a change that has been contracted for and the borrower agreed to the change in writing when signing the contract. I really don't believe a notice would be required, however for open end plans I would err on the side of caution and supply the notice.

As a side note, we don't take advantage of the ability to change the late charge when the state increases the allowable maximum, so I have not spent time researching the notice requirements, if any.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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