537.5110 Cure of default. 1. Notwithstanding any term or agreement to the contrary, the obligation of a consumer in a consumer credit transaction is enforceable by a creditor only after compliance with thissection, except that in a consumer rental purchase agreement, default is governed by section537.3618. 2. a. A creditor who believes in good faith that a consumer is in default may give the consumer written notice of the alleged default, and, if the consumer has a right to cure thedefault, shall give the consumer the notice of right to cure provided in section 537.5111before commencing any legal action in any court on an obligation of the consumer andbefore repossessing collateral. However, this subsection and subsection 4 do not require acreditor to give notice of right to cure prior to the filing of a petition by a creditor seeking toenforce the consumer’s obligation in which attachment under chapter 639 is sought uponany of the grounds specified in section 639.3, subsections 3 through 12. b. When property is attached without the giving of notice of right to cure as permitted by this subsection, the creditor immediately shall give notice of the attachment to the consumerin the ough 12. b. When property is attached without the giving of notice of right to cure as permitted by this subsection, the creditor immediately shall give notice of the attachment to the consumerin the same manner as prescribed by the rules of civil procedure for service of an originalnotice. The notice shall advise the consumer that the attachment may be discharged by thefiling of a bond as provided in sections 639.42 and 639.45, or by the filing of a motion withthe court to discharge the attachment pursuant to section 639.63. The notice required by thisparagraph is in lieu of the notice requirements of sections 639.31 and 639.33. c. When a motion is filed to discharge an attachment made without the giving of a prior notice of right to cure, the court shall hear the motion within three days of the filing of themotion to discharge. If the court finds that the attachment should not have been issued orshould not have been levied on all or any part of the property held, the attachment shallbe discharged in whole or in part and property wrongfully attached shall be returned to theconsumer. d. sued orshould not have been levied on all or any part of the property held, the attachment shallbe discharged in whole or in part and property wrongfully attached shall be returned to theconsumer. d. If the court finds that there was no probable cause to believe the grounds upon which the attachment was issued, the consumer may be awarded damages plus reasonableattorney’s fees to be determined by the court. 3. A consumer has a right to cure the default unless, in other than an insurance premium loan transaction, the creditor has given the consumer a proper notice of right to cure withrespect to a prior default which occurred within three hundred sixty-five days of the presentdefault, or the consumer has voluntarily surrendered possession of goods that are collateraland the creditor has accepted them in full satisfaction of any debt owing on the transactionin default. 4. If the consumer has a right to cure a default:a. A creditor shall not accelerate the maturity of the unpaid balance of the obligation, demand or take possession of collateral, otherwise than by accepting a voluntary surrenderof it, or otherwise attempt to enforce the obligation until twenty days after a proper nce of the obligation, demand or take possession of collateral, otherwise than by accepting a voluntary surrenderof it, or otherwise attempt to enforce the obligation until twenty days after a proper notice ofright to cure is given. b. With respect to an insurance premium loan, a creditor shall not give notice of cancellation as provided in subsection 6 until thirteen days after a proper notice of right tocure is given. c. Until the expiration of the minimum applicable period after the notice is given, the consumer may cure the default by tendering either the amount of all unpaid installmentsdue at the time of the tender, without acceleration, plus any unpaid delinquency or deferralcharges, or the amount stated in the notice of right to cure, whichever is less, or by tenderingany performance necessary to cure any default other than nonpayment of amounts due,which is described in the notice of right to cure. The act of curing a default restores to theconsumer the consumer’s rights under the agreement as though no default had occurred,except as provided in subsection 3. However, where the obligation in default is a credit cardaccount that has been closed, the act of curing a default the agreement as though no default had occurred,except as provided in subsection 3. However, where the obligation in default is a credit cardaccount that has been closed, the act of curing a default does not restore to the consumerthe consumer’s rights under the agreement as though no default had occurred. 5. This section and the provisions on waiver, agreements to forego rights, and settlement of claims under section 537.1107 do not prohibit a consumer from voluntarily surrendering Sat Dec 23 01:40:54 2023 Iowa Code 2024, Section 537.5110 (21, 0) §537.5110, CONSUMER CREDIT CODE 2 possession of goods which are collateral and do not prohibit the creditor from thereafterenforcing the creditor’s security interest in the goods at any time after default. 6. If a default on an insurance premium loan is not cured, the lender may give notice of cancellation of each insurance policy or contract to be canceled. If given, the notice ofcancellation shall be in writing and given to the insurer that issued the policy or contract andto the insured. The insurer, within two business days after receipt of the notice of cancellationtogether with a copy of the insurance premium loan agreement if not t issued the policy or contract andto the insured. The insurer, within two business days after receipt of the notice of cancellationtogether with a copy of the insurance premium loan agreement if not previously given to theinsurer, shall give any notice of cancellation required by the policy or contract or by law and,within ten business days after the effective date of the cancellation, pay to the lender anypremium unearned on the policy or contracts as of that effective date. Within ten businessdays after receipt of the unearned premium, the lender shall pay to the consumer indebtedupon the insurance premium loan any excess of the unearned premium received over theamount owing by the consumer upon the insurance premium loan. 7. If a creditor in a consumer credit transaction commences an action for money judgment prior to giving the customer notice of right to cure as required by this section andfails to follow the procedures set out in this section, the court shall dismiss the action withoutprejudice. If the action was commenced as a small claim under chapter 631, the creditorshall not be found to be in violation of this section for purposes of section 537.5201 and thepenalties n withoutprejudice. If the action was commenced as a small claim under chapter 631, the creditorshall not be found to be in violation of this section for purposes of section 537.5201 and thepenalties provided in that section shall not apply if the creditor proves by a preponderanceof the evidence that the creditor did not at the time of the violation have either knowledgeor reason to know of the requirements of this section, and for this purpose the court shallconsider all relevant evidence, including but not limited to the education or experience ofthe creditor with respect to the collection of debts arising from consumer credit transactionsand any representation of the creditor by legal counsel and any legal advice rendered to thecreditor with respect to the collection of debts arising from consumer credit transactions. [C75, 77, 79, 81, §537.5110; 82 Acts, ch 1025, §1, 2]87 Acts, ch 80, §49; 2012 Acts, ch 1023, §157; 2013 Acts, ch 140, §93; 2021 Acts, ch 80, §342Referred to in §537.5201 Sat Dec 23 01:40:54 2023 Iowa Code 2024, Section 537.5110 (21, 0)
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