The Right to Cure Under South Carolina Law
Creditors have their own obligations under the law. These requirements may even apply when a consumer fails to uphold their own responsibilities under a sales contract. One restriction is that the creditor cannot take immediate action to seize a security interest in property when the consumer falls behind in their payments. The attorneys at Crawford von Keller advise creditors on compliance with the law to help keep them from facing legal repercussions themselves.
Creditor Obligations When Collecting from Consumers
When a consumer has purchased something using an installment plan, they have certain protections if they fall behind in their payments. South Carolina has consumer protection laws that govern how and when the creditor may take possession of goods that are considered to be collateral. The laws are found in § 37-5-110-111. The creditor cannot immediately take the goods when a consumer falls behind in making payments. Instead, there is a process that they should follow, with the caveat that they may be liable themselves if they break the law.
South Carolina law a creditor to give a debtor notice of their right to cure if they fall behind on payments. The creditor cannot take action against the consumer until they are late on a payment by ten days or more. When the creditor gives the consumer notice, they must include the following:
- The name, address and telephone number of the creditor to whom payment is to be made
- A brief identification of the credit transaction
- The consumer’s right to cure the default
- The amount of payment and date by which payment must be made to cure the default
Restrictions on the Creditor’s Actions Under South Carolina Law
Once the creditor sends the notice of default to the consumer, they cannot take any action to enforce a security interest in goods that are collateral for 20 days. In that time, the consumer has the right to cure the default by making all the payments that they owe the creditor. The consumer would need to pay the amount that is due, including any late charges and fees.
The creditor cannot accelerate any future payments just because the consumer fell behind on their payments. In addition, if the creditor takes action to enforce their own security interest before ten days have elapsed after the consumer has fallen behind, they could be liable for unconscionable behavior and acting in bad faith if they are sued. The law specifically states that any repossession of collateral in violation of the law is void, and the creditor can be liable for conversion.
However, the creditor also does not need to give the customer an unlimited right or amount of time to pay what they owe. If the customer has cured the default once, the creditor does not need to send another cure notice the next time that the customer falls behind for any default that happens during the subsequent 12 months.
This law only applies when the consumer has defaulted by falling behind in payments. If the consumer has defaulted on other aspects of their contract with the creditor, they do not have similar protections under South Carolina law.
Contact a South Carolina Creditor Right Attorney Today
The law firm of Crawford von Keller is a full-service creditor rights and litigation firm. We give legal advice aimed at helping our clients comply with what can be tough laws. You can learn more about how we can help by scheduling an initial consultation with our firm. To speak with a lawyer, you can call us today at 803-790-2626 or send us a message online.
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