CHAPTER 403

FORMERLY

HOUSE BILL NO. 678

AN ACT TO AMEND CHAPTERS 9 AND 22, TITLE 5 OF THE DELAWARE CODE RELATING TO BANK AND LICENSED LENDERS' REVOLVING AND CLOSED END CREDIT.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Amend Section 952(b), Chapter 9, Title 5, Delaware Code, by deleting such

subsection (b) In its entirety and by inserting in lieu thereof the following:

"(b) (I) The bank shall notify each affected borrower of the amendment in the manner set forth in the agreement governing the plan and in compliance with the requirements of the Truth in Lending Act (15 U.S.C. §101, et seq.) and regulations promulgated thereunder, as in effect from time to time, If applicable; provided, however, that if such amendment has the effect of increasing the periodic Interest or Interest charges to be paid by the borrower, the bank shall mall or deliver to the borrower, at least 30 days before the effective date of the amendment, a clear and conspicuous written notice which shall 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, such amendment shall, except as otherwise provided for herein, 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 earlier of the mailing or delivery of the notice of the amendment, furnish written notice to the bank that the borrower does not agree to accept such 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 such borrower does not agree to accept such amendment, the proposed amendment will become effective and apply to such borrower and such 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 a timely notice electing not to accept an amendment shall be permitted to pay the outstanding unpaid indebtedness In such borrower's account under the plan In accordance with the terms of the agreement governing the plan without giving effect to the amendment; provided, however, that if the borrower does not agree to accept such proposed amendment, the bank may convert the borrower's account to a closed end credit account as governed by Chapter 9, Subchapter III of Title 5, 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 such amendment, the bank may require the borrower to return to It all credit devices. If after 30 days from the 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 such 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 such amendment would have become effective but for the giving of notice by the borrower.

(1) Notwithstanding (b) (2) above, the bank may also amend the agreement governing the plan by requiring 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, obtaining a loan or If the borrower indicates to the bank in writing such 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 such borrower so used such borrower's account or so indicated agreement to the amendment. Any borrower who falls to use such borrower's account or so to indicate agreement to an amendment shall be permitted to pay the outstanding unpaid Indebtedness in such 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 (b) (2) above."

Section 2. Amend Subchapter 11, Chapter 9, Title 5, Delaware Code, by adding a new Section 975 to read as follows:

1975. Commissioner's Regulations.

The State Bank Commissioner may prescribe regulations to carry out the purpose of this chapter."

Section 3. Amend Section 2224(d), Chapter 22, Title 5, Delaware Code, by deleting subsection (d) In Its entirety, and inserting In lieu thereof the following:

"(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:

(I) a decrease in the required amount of periodic Installment payments;

(11) a change In the schedule of formula used under a variable rate plan under Section 2217 of this chapter provided that the Initial Interest rate resulting from such change is not an Increase."

Section 4. Amend Section 2224, Title 5, Chapter 22, Delaware Code, by deleting

subsection (b) thereof In Its entirety and inserting In Ileu thereof the following:

"(b) (I) The licensee shall notify each affected borrower of the amendment In the manner set forth In the agreement governing the plan and In compliance with the requirements of the Truth in Lending Act (15 U.S.C. §160I, et seq.) and regulations promulgated thereunder, as In effect from time to time, If applicable: provided, however, that If such amendment has the effect of increasing the Interest or other charges to be paid by the borrower, the licensee shall mall or deliver to the borrower, at least 30 days before the effective date of the amendment, a clear and conspicuous written notice which shall 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 Interest or other charges to be paid by the borrower, such amendment shall 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 earlier of the mailing or delivery of the notice of the amendment, furnish written notice to the licensee that the borrower does not agree to accept such amendment. The notice from the licensee shall Include a statement that, absent the borrower's written notice to the licensee within 30 days of the earlier of the mailing or delivery of the notice of the amendment that such borrower does not agree to accept such amendment, the proposed amendment will become effective and automatically apply to such borrower and such 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 a timely notice electing not to accept an amendment shall be permitted to pay the outstanding unpaid Indebtedness in such borrower's account under the plan In accordance with the terms of the agreement governing the plan without giving effect to the amendment; provided, however, that if the borrower does not agree to accept the proposed amendment, the licensee may convert the borrower's account to a closed end credit account as governed by Chapter 22, of Title 5, 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 an amendment, the licensee may require the borrower to return to It all credit devices. If after 30 days from the mailing or delivery by the licensee of a proposed amendment, a borrower uses a credit device to obtain credit under a plan, notwithstanding that the borrower has prior to such use given the licensee 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 such amendment would have become effective but for the giving of notice by the borrower.

(3) Notwithstanding (b) (2) above, the licensee may also amend the agreement governing the plan by requiring that any such 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 licensee In writing such 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 such borrower so used such borrower's account or so Indicated agreement to the amendment. Any borrower who falls to use such borrower's account or so to indicate agreement to an amendment shall be permitted to pay the outstanding unpaid indebtedness in such 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 licensee to convert the borrower's account to a closed end credit account as provided in (b) (2) above."

Approved July 15, 1988.