I. INTRODUCTION
In 1983, the Nebraska Legislature enacted LB 111 to provide a procedure for a consumer of a consumer credit transaction to receive a one-time notification of default and opportunity to cure such default within a restricted time period. This consumer credit default procedure is codified in Neb.Rev.Stat. §§ 45-1,105 to 45-1,110. The law applies to all consumer credit transactions in Nebraska that are subject to a security interest, defined in § 1-201 (37), Uniform Commercial Code, and entered into, extended or renewed on or after January 1, 1984.
Definitions. Several key terms defined in § 45-1,105 lends clarity to the scope of this law:
Consumer means a “natural person to whom credit is offered or extended by way of a transaction if the money, property, or services of the transaction are primarily for personal, family, or household purposes”.
Creditor means those “who regularly extend, or arrange for the extension of, credit which is payable by agreement in more than four installments or for which payment of a finance charge is or may be required, whether in connection with loans, sale of property or services, or otherwise”. The law does not apply to small loan licensees (See, § 45-1,110) who are subject to separate consumer credit default and collection procedures.
Collateral consists of “property subject to a security interest as defined by the Uniform Commercial Code”.
Credit mean “the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment”.
Default means either “[T]he consumer fails to make a payment required by the agreement” or “[T]he prospect of payment, performance, or realization of collateral is significantly impaired.” The burden of establishing the prospect of significant impairment is on the creditor.
II. DEFAULT NOTICE REQUIRED IN A CONSUMER CREDIT TRANSACTION
Timing and Contents of Notice. In a consumer credit transaction, after a consumer has been in default for ten days, a creditor may give the consumer a written notice (See, sample Notice of Right to Cure Loan Default form) that conspicuously states: the name, address and telephone number of the creditor to which payment is to be made; a brief identification of the credit transaction; the consumer’s right to cure the default; and the amount of payment and date by which payment must be made to cure the default or any other performance necessary to cure the default and the date by which such performance must be tendered.
Manner of Notification. A creditor gives notice to the consumer under this section when he or she delivers the notice to the consumer or delivers or mails the notice to the consumer’s last-known residence address. See, § 45-1,106.
III. CONSUMER'S RIGHT TO CURE AFTER DEFAULT
20-Day Stay. After default in a consumer credit transaction, a creditor may neither accelerate maturity of the unpaid balance of the obligation nor take possession of collateral, except voluntarily surrendered collateral, because of such default until twenty days after a notice of the consumer’s right to cure is given.
20-Day Time to Cure. The consumer has twenty days after the notice is given to cure any default by tendering the amount of all unpaid sums due at the time of the tender, without acceleration, plus any unpaid charges, or by tendering any other performance necessary to cure the default as specified in the notice of right to cure. If cure is accomplished, it restores the consumer to his or her rights under the agreement as though the default had not occurred. See, § 45-1,107(1).
Only One Right to Cure on same Obligation. Regarding defaults on the same obligation, after a creditor has once given notice of the consumer’s right to cure, the consumer shall have no further right to cure and the creditor has no obligation to proceed against the consumer or the collateral. See, § 45-1,107(2).
Voluntary Surrender and Enforcement Allowed. The law does not prevent a consumer from voluntarily surrendering possession of goods which are collateral and does not prevent the creditor from thereafter enforcing any security interest in the goods at any time after default. See, § 45-1,108.
The "Notice of Right To Cure Loan Default" form can be found at https://ndbf.nebraska.gov/industries/consumer-lending-forms.