§ 6-21.2. Attorneys' fees in notes, etc., in addition to interest. - North Carolina Statutes

§ 6‑21.2.  Attorneys'fees in notes, etc., in addition to interest.

Obligations to pay attorneys'fees upon any note, conditional sale contract or other evidence ofindebtedness, in addition to the legal rate of interest or finance chargesspecified therein, shall be valid and enforceable, and collectible as part ofsuch debt, if such note, contract or other evidence of indebtedness becollected by or through an attorney at law after maturity, subject to thefollowing provisions:

(1)        If such note,conditional sale contract or other evidence of indebtedness provides forattorneys' fees in some specific percentage of the "outstandingbalance" as herein defined, such provision and obligation shall be validand enforceable up to but not in excess of fifteen percent (15%) of said"outstanding balance" owing on said note, contract or other evidenceof indebtedness.

(2)        If such note,conditional sale contract or other evidence of indebtedness provides for thepayment of reasonable attorneys' fees by the debtor, without specifying anyspecific percentage, such provision shall be construed to mean fifteen percent(15%) of the "outstanding balance" owing on said note, contract orother evidence of indebtedness.

(3)        As to notes andother writing(s) evidencing an indebtedness arising out of a loan of money tothe debtor, the "outstanding balance" shall mean the principal andinterest owing at the time suit is instituted to enforce any security agreementsecuring payment of the debt and/or to collect said debt.

(4)        As to conditionalsale contracts and other such security agreements which evidence both amonetary obligation and a security interest in or a lease of specific goods,the "outstanding balance" shall mean the "time pricebalance" owing as of the time suit is instituted by the secured party toenforce the said security agreement and/or to collect said debt.

(5)        The holder of anunsecured note or other writing(s) evidencing an unsecured debt, and/or theholder of a note and chattel mortgage or other security agreement and/or theholder of a conditional sale contract or any other such security agreementwhich evidences both a monetary obligation and a security interest in or alease of specific goods, or his attorney at law, shall, after maturity of theobligation by default or otherwise, notify the maker, debtor, account debtor,endorser or party sought to be held on said obligation that the provisionsrelative to payment of attorneys' fees in addition to the "outstandingbalance" shall be enforced and that such maker, debtor, account debtor,endorser or party sought to be held on said obligation has five days from themailing of such notice to pay the "outstanding balance" without theattorneys' fees. If such party shall pay the "outstanding balance" infull before the expiration of such time, then the obligation to pay theattorneys' fees shall be void, and no court shall enforce such provisions.

(6)        If the attorneys'fees are for services rendered to an assignee or a debt buyer, as defined inG.S. 58‑70‑15, all of the following materials setting forth aparty's obligation to pay attorneys' fees shall be provided to the court beforea court may enforce those provisions:

a.         A copy of thecontract or other writing evidencing the original debt, which must contain asignature of the defendant. If a claim is based on credit card debt and no suchsigned writing evidencing the original debt ever existed, then copies ofdocuments generated when the credit card was actually used must be attached.

b.         A copy of theassignment or other writing establishing that the plaintiff is the owner of thedebt. If the debt has been assigned more than once, then each assignment orother writing evidencing transfer of ownership must be attached to establish anunbroken chain of ownership. Each assignment or other writing evidencingtransfer of ownership must contain the original account number of the debtpurchased and must clearly show the debtor's name associated with that accountnumber.

Notwithstandingthe foregoing, however, if debtor has defaulted or violated the terms of thesecurity agreement and has refused, on demand, to surrender possession of thecollateral to the secured party as authorized by G.S. 25‑9‑609,with the result that said secured party is required to institute an ancillary claimand delivery proceeding to secure possession of said collateral; no suchwritten notice shall be required before enforcement of the provisions relativeto payment of attorneys' fees in addition to the outstanding balance.  (1967, c. 562, s. 4; 2000‑169,s. 27; 2009‑573, s. 7.)