17:3B-41 - Terms of agreement, amendment
17:3B-41. Terms of agreement, amendment
13. a. A bank may, if the agreement governing a revolving credit plan so provides, at any time, or from time to time, amend the terms of the agreement, including without limitation, the terms governing the periodic percentage rate or rates used to calculate interest, the method of computing the outstanding unpaid indebtedness to which the rate or rates are applied, the amounts of other charges and the applicable installment repayment schedule, in accordance with the further provisions of this section.
b. (1) The bank shall notify each affected borrower of an amendment to the terms of the agreement in the manner set forth in the agreement governing the plan and in compliance with the requirements of the federal "Truth in Lending Act," 15 U.S.C. s.1601 et seq., and regulations promulgated thereunder, if applicable; except that if the amendment has the effect of increasing the periodic interest or interest charges to be paid by the borrower, the bank shall mail or deliver to the borrower, at least 30 days before the effective date of the amendment, a conspicuous written notice which shall clearly describe the amendment and shall also set forth the effective date of the amendment and the pertinent information contemplated by the following provisions of this section.
(2) If the amendment has the effect of increasing the periodic interest or interest charges to be paid by the borrower, the amendment shall, except as otherwise provided for in this section, become effective as to a particular borrower as of the first day of the billing cycle during which the effective date of the amendment occurs or as of any later date, in either case, in accordance with this section and as stipulated in the notice, so long as the borrower does not, within 30 days of the mailing or the delivery of the notice of the amendment, whichever is earlier, furnish written notice to the bank that the borrower does not agree to accept the amendment. The notice from the bank shall include: a statement that, absent the borrower's written notice to the bank, within 30 days of the earlier of the mailing or delivery of the notice of the amendment, that the borrower does not agree to accept the amendment, the proposed amendment will become effective and apply to the borrower and the borrower's account; and the address to which a borrower may send notice of the borrower's election not to accept the amendment. Any borrower who gives timely notice electing not to accept an amendment shall be permitted to pay the outstanding unpaid indebtedness in the borrower's account under the plan in accordance with the terms of the agreement governing the plan without giving effect to the amendment; except that if the borrower does not agree to accept the proposed amendment, the bank may convert the borrower's account to a closed-end credit account on credit terms substantially identical to or more favorable to the borrower than those set forth in the then existing agreement governing the borrower's account and the borrower will continue to be subject to the terms of the existing agreement or the more favorable terms until the borrower's account balance is paid in full. As a condition to the effectiveness of any notice that a borrower does not accept the amendment, the bank may require the borrower to return all credit devices. If after 30 days from mailing or delivery by the bank of a proposed amendment, a borrower uses a credit device to obtain credit under a plan, notwithstanding that the borrower has, prior to the use, given the bank notice that the borrower does not accept an amendment, the amendment shall be deemed to have been accepted and shall become effective as to the borrower and the borrower's account as of the date that the amendment would have become effective but for the giving of notice by the borrower.
(3) Notwithstanding paragraph (2) of this subsection b., the bank may also amend the agreement governing the plan to require that any amendment shall become effective only if the borrower uses the plan after a date specified in the notice of the proposed amendment which is at least 30 days after the giving of the notice, but which need not be the date the amendment becomes effective, by making a purchase or obtaining a loan or if the borrower indicates to the bank the borrower's express agreement to the amendment. Any such amendment may become effective as to a particular borrower as of the first day of the billing period during which the borrower used the borrower's account or indicated agreement to the amendment. Any borrower who fails to use the borrower's account or to indicate agreement to an amendment shall be permitted to pay the outstanding unpaid indebtedness in the borrower's account under the plan in accordance with the terms of the agreement governing the plan without giving effect to the amendment subject to the right of the bank to convert the borrower's account to a closed-end credit account as provided in paragraph (2) of this subsection b.
c. If the terms of the agreement governing the plan, as originally drawn or as amended pursuant to this section, so provide, any amendment may, on and after the date upon which it becomes effective as to a particular borrower, apply to all then outstanding unpaid indebtedness in the borrower's account under the plan, including any indebtedness which shall have arisen out of purchases made or loans obtained prior to the effective date of the amendment.
d. For purposes of this section, the following shall not be deemed an amendment which has the effect of increasing the interest to be paid by the borrower:
(1) A decrease in the required amount of a periodic installment payment.
(2) A change in the schedule or formula used under a variable rate plan under section 5 of this act so long as the initial interest rate resulting from the change is not an increase.
(3) A change from a daily periodic rate to a periodic rate other than daily or from a periodic rate other than daily to a daily periodic rate under section 4 of this act.
e. The procedure for amendment by a bank of the terms of a plan to which the borrower, other than an individual borrower, is a party may, in lieu of the foregoing provisions of this section, be as the agreement governing the plan may otherwise provide.
L.1996,c.137,s.13.