Sec. 406. (1) An agreement with respect to a small loan may not provide for charges as a result of default by the borrower other than those specifically authorized by this chapter. A provision in a small loan agreement in violation of this section is unenforceable.
(2) A lender or an assignee of a small loan may seek only the following remedies upon default by a borrower:
(a) Recovery of:
(i) the contracted principal amount of the loan; and
(ii) the loan finance charge.
(b) If contracted for under section 202 of this chapter, collection of a fee for:
(i) a returned check, negotiable order of withdrawal, or share draft; or
(ii) a dishonored authorization to debit the borrower's account;
because of insufficient funds in the borrower's account.
(c) Collection of postjudgment interest, if awarded by a court.
(d) Collection of court costs, if awarded by a court.
(3) A lender or an assignee of a small loan may not seek any of the following damages or remedies upon default by a borrower:
(a) Payment of the lender's attorney's fees.
(b) Treble damages.
(c) Prejudgment interest.
(d) Damages allowed for dishonored checks under any statute other than this chapter.
(e) Any damages or remedies not set forth in subsection (2).
(4) A contractual agreement in a small loan transaction must include a notice of the following in 14 point bold type:
(a) The remedies available to a lender or an assignee under subsection (2).
(b) The remedies and damages that a lender or an assignee is prohibited from seeking in a small loan transaction under subsection (3).
As added by P.L.38-2002, SEC.1. Amended by P.L.73-2004, SEC.29; P.L.10-2006, SEC.18 and P.L.57-2006, SEC.18; P.L.90-2008, SEC.16; P.L.60-2016, SEC.5.
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