DEPARTMENT OF BUSINESS REGULATION

BUREAU OF CONSUMER PROTECTION

CENTRAL BUILDING - STEVENS TRAINING CENTER

HALLOWELL, MAINE

Mailing Address:

STATE OFFICE BUILDING, AUGUSTA, MAINE 04333

(207)289-3731

ADVISORY RULING #41

MAY 23, 1979

(Repealed - See AR #52)

May 23, 1979

You have requested whether costs of repossession are considered "collection costs" which are prohibited charges under a consumer credit transaction governed by the Code, 9-A MRSA § 2-507.  In my opinion the scope of the prohibition on collection costs in Section 2-507 includes the costs of repossessing the collateral in a secured transaction.

You point out that Uniform Commercial Code, 11 MRSA § 9-504 allows such expenses to be charged to the debtor.  However, this provision of the UCC must be read in conjunction with the Credit Code Section 1-103:  "Unless displaced by the provisions of this Act, ...." the UCC "supplements" the Credit Code.  I find that the express provision of Section 2-507 displaces the UCC 9-504.

This interpretation of the plain meaning of Section 2-507 must also stand even though Section 3-402 of the Credit Code allows the imposition of "reasonable expenses incurred in realizing on a security interest".  Much the same reasoning found in Advisory Opinion #29 concerning attorney's fees is applicable here.  The addition of the phrase in Section 2-507 (1) and (2), "or any other collection costs", is a non-uniform amendment to the Code.  Section 3-402, on the other hand, is based on the 1969 and 1974 drafts of the U3C.  While legislative history on the intent of the non-uniform amendment is sparse, the plain meaning of the term "collection costs" must override the more general permissive language of 3-402.  The comment to the 1974 U3C clearly relates the limitation on default charges to the prohibition on attorney's fees set forth as alternative A in section 2-507.  The same reasoning would relate the "collection costs" prohibition to 3-402.

ADVISORY RULING #41

MAY 23, 1979

PAGE 2

I should also point out that while 2-507 (2) allows attorney's fees under certain circumstances, the prohibition on collection costs appears in both subsections (1) & (2).  Therefore, collection costs of any kind cannot be provided for in a consumer credit transaction.

Thank you.

Sincerely,

/s/ Barbara Reid Alexander

Barbara Reid Alexander

Superintendent

BRA/erb