Signed by Governor Jack Markell

Vote Smart's Synopsis:

Vote to pass a bill that limits the number of short-term consumer loans a person can acquire, effective January 1, 2013.

Highlights:

• Limits the number of short-term consumer loans a borrower may acquire to no more than 5 in a 12 month period (Sec. 2).

• Authorizes the  development of a database for lenders to determine the following (Sec. 3):
• Whether a borrower has preexisting short-term consumer loans;
• The number of preexisting short-term consumer loans a borrower has;
• Whether a borrower is eligible for a short-term consumer loan; and
• Any relevant information required to maintain compliance with this bill.

• Amends the definition of “short-term consumer loans” to include loans of $1,000 or less, whereas existing law deines it as a loan of $500 or less (Sec. 1).

• Requires “workout agreements” between borrowers and lenders to provide for payments to be made in equal installments over a period of at least 90 days, and prohibits the lender from assessing any other fees, interest charges, or other charges on the borrower as a result of altering the loan into a workout agreement (Sec. 1).

• Defines “workout agreement” as an agreement between an individual borrower and licensed lender for the repayment of an outstanding debt (Sec. 1).

• Prohibits a lender from engaging in any method meant to evade this law, including, but not limited to, the following (Sec. 2):
• Offering, making, or assisting a borrower in obtaining a loan that is in violation of this chapter; and
• Disguising a short-term consumer loan as a revolving line of credit, or assisting a borrower in obtaining a revolving line of credit for the purposes of evading the requirements of this law.

• Requires the State Bank Commissioner to collect and submit a report on short-term consumer loans to the House of Representatives by March 15th of each year (Sec. 4).

Full Bill Text