16-205. Interest rates or charges; contract rates continue until payment in full; judgments; excess rates and charges void.
16-205
16-205. Interest rates or charges; contract rates continue until payment
in full; judgments; excess rates and charges void.
(a) When a rate of interest or charges is specified in any contract,
that rate shall continue until full payment is made, and any judgment
rendered on any such contract shall bear the same rate of interest or
charges mentioned in the contract, which rate shall be specified in the
judgment; but in no case shall such rate or charges exceed the maximum rate
or amount authorized by law, and any bond, note, bill, or other contract
for the payment of money, which in effect provides that any interest or
charges or any higher rate of interest or charges shall accrue as a penalty
for any default, shall be void as to any such provision.
(b) Judgments taken in accordance with the provisions of subsection (a)
shall be expressed as follows:
(1) Judgments upon interest-bearing contracts shall provide (i) the
unpaid principal balance, (ii) the date to which interest is paid, (iii)
the contract rate of interest and (iv) that the unpaid principal balance
shall draw the contract rate of interest from the date to which interest is
paid until payment in full.
(2) Judgments upon precomputed interest-bearing contracts shall provide:
(i) The unpaid principal balance shall be ascertained by deducting from
the remaining total of payments owed on the contract that portion of the
precomputed finance charges that are unearned as of the date of acceleration
of the maturity of the contract, as provided in K.S.A. 16a-2-510 for computing
the unearned portion of precomputed finance charges in the event of prepayment
in full. Any delinquency or deferral charges added to the unpaid balance
subsequent to the date of acceleration shall be first deducted from the
unpaid balance prior to any such acceleration.
The contract shall be accelerated as of the date provided for in the
provisions
of the contract, or if the contract does not provide for the date on which
the contract shall be accelerated, it shall be accelerated as of the actual
date of any such acceleration; (ii) the date to which interest is paid,
which date shall be the maturity date of the next installment due after
the date of acceleration, except those contracts which are accelerated on
an installment due date which shall be the date of acceleration; the date
to which interest is paid for those contracts that have matured prior to
judgment shall be calculated from maturity date of the contract; (iii)
the contract rate of interest; and
(iv) that the unpaid principal balance shall draw the contract rate of
interest from the date to which interest is paid until payment in full.
(3) Judgments upon contracts where the finance charges are computed in
dollars per hundred and added on to the original balance to be financed
shall provide: (i) The unpaid principal balance shall be ascertained by
deducting from the remaining
total of payments owed on the contract that portion of the precomputed finance
charges that are unearned as of the date of acceleration of the maturity
of the contract as provided in K.S.A. 16a-2-510 for computing the unearned
portion of precomputed finance charges in the event of prepayment in full.
Any delinquency or deferral charges added to the unpaid balance subsequent
to the date of acceleration shall be first deducted from the
unpaid balance prior to any such acceleration. The contract shall be
accelerated
as of the date provided for in the provisions of the contract, or if the
contract does not provide for the date on which the contract shall be
accelerated,
it shall be accelerated as of the actual date of any acceleration; (ii) the
date to which interest is paid, which date shall be the maturity
date of the next installment due after the date of acceleration, except
those contracts which are accelerated on an installment due date which shall
be the date of acceleration; the date to which interest is paid for those
contracts that have matured prior to judgment shall be calculated from the
maturity date of the contract; (iii) the contract
rate of interest expressed as an annual percentage figure, which may be
taken from the contract if it discloses the annual percentage rate, or it
shall be ascertained in accordance with the constant ratio method which is
mathematically expressed as follows:
2mc
R=____________ where
p(n + 1)
R = rate of charge
m = number of payment periods in one year
n = number of payments to discharge the debt
c = charge in dollars
p = principal or cash advanced
and (iv) that the unpaid principal balance shall draw the
contract rate of interest as determined herein from the date to which interest
is paid until
payment in full.
History: L. 1889, ch. 164, § 5; R.S. 1923, 41-105; L. 1955, ch.
135, § 27; L.
1974, ch. 90, § 1; L.1976, ch. 96, §1; July 1.