BILL REQ. #:  S-4236.1 

Read first time 01/19/2006.   Referred to Committee on Financial Institutions, Housing & Consumer Protection.

     AN ACT Relating to small loan payment plans; and amending RCW 31.45.084.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   RCW 31.45.084 and 2003 c 86 s 12 are each amended to read as follows:
     (1) ((A licensee and borrower may agree to a payment plan for a small loan at any time. After four successive loans and prior to default upon the last loan, each borrower may convert their small loan to a payment plan.)) If the borrower is unable to repay a small loan in full on the due date, the licensee shall provide the borrower with a loan repayment plan. The repayment plan shall be in the form of a new loan with a principal balance in the amount of the outstanding small loan minus any payments made on that loan. Each agreement for a loan payment plan must be in writing and acknowledged by both the borrower and the licensee. The licensee may charge the borrower, at the time both parties enter into the payment plan, a one-time fee for the payment plan in an amount up to the fee or interest on the outstanding principal of the loan as allowed under RCW 31.45.073(3). The licensee may not assess any other fee, interest charge, or other charge on the borrower as a result of converting the small loan into a payment plan. This payment plan must provide for the payment of the total of payments due on the small loan over a period not less than ((sixty)) ninety days in three or more payments, unless the borrower and licensee agree to a shorter payment period. The borrower may pay the total of payments at any time. The licensee may not charge any penalty, fee, or charge to the borrower for prepayment of the loan payment plan by the borrower. Each licensee shall conspicuously disclose to each borrower in the small loan agreement or small loan note that the borrower has access to such a payment plan ((after four successive loans)). A licensee's violation of such a payment plan constitutes a violation of this chapter.
     (2) ((The licensee may take postdated checks at the initiation of the payment plan for the payments agreed to under the plan. If any check accepted by the licensee as payment under the payment plan is dishonored, the licensee may not charge the borrower any fee for the dishonored check.)) Any outstanding check securing a small loan must be returned to the borrower at the time the repayment plan is signed by both the borrower and the licensee.
     (3) If the borrower defaults on the payment plan, the licensee may initiate action to collect the total of payments under RCW 31.45.082. The licensee may charge the borrower a one-time payment plan default fee of twenty-five dollars.
     (4) If the licensee enters into a payment plan with the borrower through an accredited third party, with certified credit counselors, that is representing the borrower, the licensee's failure to comply with the terms of that payment plan constitutes a violation of this chapter.