§ 5-2-209 — Advances to perform covenants of consumer

(1) If the agreement
with respect to a consumer credit transaction contains covenants by the consumer
to perform certain duties pertaining to insuring or preserving collateral, and the
creditor pursuant to the agreement pays for performance of the duties on behalf of
the consumer, the creditor may add the amounts paid to the debt if:

(a) The expenditure is reasonable to protect the risk of loss or damage to the
property;

(b) The creditor has mailed to the consumer, at the consumer's last-known
address, written notice of the consumer's nonperformance and has given the
consumer reasonable opportunity after such notice to so perform; and

(c) In the absence of performance, the creditor has made all expenditures on
behalf of the consumer in good faith and in a commercially reasonable manner.

(2) Within a reasonable time after advancing any sums, the creditor shall
state to the consumer in writing the amount of the sums advanced, any charges
with respect to this amount, and any revised payment schedule, and, if the duties of
the consumer performed by the creditor pertain to insurance, a brief description of
the insurance paid for by the creditor including the type and amount of coverage.
No further information need be given.

(3) A finance charge may be made for sums advanced pursuant to this
section at a rate not exceeding the rate stated to the consumer pursuant to the
provisions on disclosure contained in section 5-3-101 with respect to the consumer
credit transaction; except that, with respect to a revolving account, the amount of
the advance may be added to the unpaid balance of the debt and the creditor may
make a finance charge not exceeding that permitted by the provisions on finance
charges.

Legislative History

Source: L. 2000: Entire article R&RE, p. 1202, � 1, effective July 1.