2008 -- S 2442 SUBSTITUTE B

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LC01646/SUB B

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2008

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A N A C T

RELATING TO THE RHODE ISLAND AUTOMOBILE REPOSSESSION ACT

     Introduced By: Senator Michael J. McCaffrey

     Date Introduced: February 13, 2008

     Referred To: Senate Corporations

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 6-51-1 and 6-51-3 of the General Laws in Chapter 6-51 entitled

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"The Rhode Island Automobile Repossession Act" are hereby amended to read as follows:

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     6-51-1. Legislative findings. -- The general assembly finds and declares that:

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      (a) Rhode Island consumers who have purchased, through an extension of credit, or

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leased an automobile may fall behind on payments during difficult economic or emotional times

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and should be allowed to cure a default on the loan or lease within the time provided under this

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chapter.

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      (b) If the consumer is unable to cure such a default and the lessor or secured party

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repossesses the automobile, the repossession cannot take place on the property owned or rented

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by the consumer without their consent except as provided by this chapter or by judicial action. In

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the event of repossession a consumer is allowed to redeem the automobile within the time

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provided by this chapter.

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      (c) The lessor or secured party who holds title to the automobile shall be allowed to

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dispose of the automobile after repossession in order to recover the fair market value of the

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vehicle and expenses from the repossession according to the provisions of this chapter and any

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other applicable laws of this state.

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     6-51-3. Default, notice, right to cure, reinstatement. -- (a) The default provisions of a

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consumer automobile lease or automobile loan agreement are enforceable only to the extent that:

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      (1) The consumer does not make one or more payments required by the lease or loan

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agreement; or

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      (2) The lessor or secured party establishes that the prospect of payment, performance or

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realization of the lessor's or secured party's interest in the automobile is significantly impaired.

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      (b) After a default under an automobile lease or loan agreement by the consumer the

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lessor or secured party may not be accelerate, take judicial action to collect, or repossess the

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automobile until the lessor or secured party gives the consumer the notice required by this section

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and the consumer does not cure the default in the time allowed under this section. A lessor or

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secured party may initiate a procedure for to cure by sending to the consumer, at any time after

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the consumer has been in default for ten (10) days, a notice of the right to cure the default. Said

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notice shall be delivered via certified mail, return receipt requested, or via first class mail, at the

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consumer's address last known to the lessor or secured party. The time when notice is given shall

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be the date the consumer signs the receipt or, if the notice is undeliverable, the date the post office

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last attempts to deliver it. deemed to be upon actual delivery of the notice to the consumer or

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three (3) business days following the mailing of the notice to the consumer at the consumer's

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address last known to the lessor or secured party.

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      (c) The notice shall be in writing and shall conspicuously state the rights of the consumer

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upon default in substantially the following form:

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      The heading shall read: "Rights of Defaulting consumer under Rhode Island General

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Laws." The body of the notice shall read: "You may cure your default in (describe automobile

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lease or loan agreement in a manner enabling the consumer to identify it) by paying to (name and

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address of lessor or secured party) (amount due) before (date which is at least twenty-one (21)

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days after notice is delivered). If you pay this amount within the time allowed you are no longer

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in default and may continue with the automobile (lease or loan) agreement as though no default

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has occurred.

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      If you do not cure your default by the date stated above, (the lessor or secured party)

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may sue you to obtain a judgment for the amount of the debt or and may take possession of the

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automobile.

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      If (the lessor or secured party) takes possession of the automobile, you may get it back

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by paying the full amount of your debt plus any reasonable expenses incurred by (the lessor or

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secured party) if you make the required payment within twenty (20) days after (the lessor or

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secured party) takes possession.

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     If (secured party) sells the vehicle repossessed from the consumer for an amount

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exceeding the amount outstanding on the automobile (loan) agreement including reasonable

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expenses related to judicial action and or repossession, the excess funds shall be returned

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promptly to the defaulting consumer.

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      You have the right to cure a default only once in any twelve (12) month period during

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the period of the automobile (lease or loan) agreement. If you default again within the next twelve

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(12) months in making your payments, we may exercise our rights without sending you another

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right to cure notice. If you have questions, telephone (name of lessor or secured party) at (phone

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number).”

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      (d) Within the period for cure stated in the notice under this section, the consumer may

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cure the default by tendering the amount of all unpaid sums due at the time of tender, including

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any unpaid delinquency or default charges, but without additional security deposit or prepayment

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of period payments not yet due. Cure restores the rights of the lessor or secured party and

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consumer under the automobile loan or lease agreement as if the default had not occurred.

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      (e) A consumer has the right to cure only once in any twelve (12) month period during

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the period of the automobile lease or loan agreement.

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     SECTION 2. This act shall take effect upon passage.

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LC01646/SUB B

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO THE RHODE ISLAND AUTOMOBILE REPOSSESSION ACT

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     This act would permit notice of default on an automobile lease or loan to be via first class

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mail and would permit the time when notice is deemed to be given to the defaulter upon actual

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delivery of the notice or three business days following the mailing of the notice to the consumer's

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last known address.

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     This act would take effect upon passage.

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LC01646/SUB B

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