North Carolina SB 60: GSC Attorneys' Fees in Debt Instruments.

Bill Text

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 1
SENATE BILL 60

Short Title: GSC Attorneys' Fees in Debt Instruments. (Public)
Sponsors: Senator Galey (Primary Sponsor).
Referred to: Rules and Operations of the Senate
February 6, 2025
*S60-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO CLARIFY HOW A CREDITOR MAY ENFORCE AN OBLIGATION TO PAY 2
ATTORNEYS' FEES IN A DEBT INSTRUMENT AND TO AMEND THE DEFAULT 3
RATE FOR THESE FEES. 4
The General Assembly of North Carolina enacts: 5
SECTION 1. G.S. 6-21.2 reads as rewritten: 6
"§ 6-21.2. Attorneys' fees in notes, etc., in addition to interest.debt instruments. 7
Obligations to pay attorneys' fees upon any note, conditional sale contract or other evidence 8
of indebtedness, in addition to the legal rate of interest or finance charges specified therein, shall 9
be valid and enforceable, and collectible as part of such debt, if such note, contract or other 10
evidence of indebtedness be collected by or through an attorney at law after maturity, subject to 11
the following provisions: 12
(1) If such note, conditional sale contract or other evidence of indebtedness 13
provides for attorneys' fees in some specific percentage of the "outstanding 14
balance" as herein defined, such provision and obligation shall be valid and 15
enforceable up to but not in excess of fifteen percent (15%) of said 16
"outstanding balance" owing on said note, contract or other evidence of 17
indebtedness. 18
(2) If such note, conditional sale contract or other evidence of indebtedness 19
provides for the payment of reasonable attorneys' fees by the debtor, without 20
specifying any specific percentage, such provision shall be construed to mean 21
fifteen percent (15%) of the "outstanding balance" owing on said note, 22
contract or other evidence of indebtedness. 23
(3) As to notes and other writing(s) evidencing an indebtedness arising out of a 24
loan of money to the debtor, the "outstanding balance" shall mean the 25
principal and interest owing at the time suit is instituted to enforce any security 26
agreement securing payment of the debt and/or to collect said debt. 27
(4) As to conditional sale contracts and other such security agreements which 28
evidence both a monetary obligation and a security interest in or a lease of 29
specific goods, the "outstanding balance" shall mean the "time price balance" 30
owing as of the time suit is instituted by the secured party to enforce the said 31
security agreement and/or to collect said debt. 32
(5) The holder of an unsecured note or other writing(s) evidencing an unsecured 33
debt, and/or the holder of a note and chattel mortgage or other security 34
agreement and/or the holder of a conditional sale contract or any other such 35
security agreement which evidences both a monetary obligation and a security 36

General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 60-First Edition
interest in or a lease of specific goods, or his attorney at law, shall, after 1
maturity of the obligation by default or otherwise, notify the maker, debtor, 2
account debtor, endorser or party sought to be held on said obligation that the 3
provisions relative to payment of attorneys' fees in addition to the "outstanding 4
balance" shall be enforced and that such maker, debtor, account debtor, 5
endorser or party sought to be held on said obligation has five days from the 6
mailing of such notice to pay the "outstanding balance" without the attorneys' 7
fees. If such party shall pay the "outstanding balance" in full before the 8
expiration of such time, then the obligation to pay the attorneys' fees shall be 9
void, and no court shall enforce such provisions. 10
(6) If the attorneys' fees are for services rendered to an assignee or a debt buyer, 11
as defined in G.S. 58-70-15, all of the following materials setting forth a 12
party's obligation to pay attorneys' fees shall be provided to the court before a 13
court may enforce those provisions: 14
a. A copy of the contract or other writing evidencing the original debt, 15
which must contain a signature of the defendant. If a claim is based on 16
credit card debt and no such signed writing evidencing the original 17
debt ever existed, then copies of documents generated when the credit 18
card was actually used must be attached. 19
b. A copy of the assignment or other writing establishing that the plaintiff 20
is the owner of the debt. If the debt has been assigned more than once, 21
then each assignment or other writing evidencing transfer of 22
ownership must be attached to establish an unbroken chain of 23
ownership. Each assignment or other writing evidencing transfer of 24
ownership must contain the original account number of the debt 25
purchased and must clearly show the debtor's name associated with 26
that account number. 27
Notwithstanding the foregoing, however, if debtor has defaulted or violated 28
the terms of the security agreement and has refused, on demand, to surrender 29
possession of the co