Session of 2000
SENATE BILL No. 422 By Committee on Judiciary 1-18

9 AN ACT concerning contracts; relating to interest rates; amending
10 K.S.A. 16-205 and repealing the existing section.
11
12 Be it enacted by the Legislature of the State of Kansas:
13 Section 1. K.S.A. 16-205 is hereby amended to read as follows: 16-
14 205. (a) When a rate of interest or charges is specified in any contract,
15 that rate shall continue until full payment is made, and any judgment
16 rendered on any such contract shall bear the same rate of interest or
17 charges mentioned in the contract~~, which~~. Such rate shall be specified in
18 the judgment~~; but~~. In no case shall such rate or charges exceed the max-
19 imum rate or amount authorized by law~~, and~~. Any bond, note, bill, or
20 other contract for the payment of money, which in effect provides that
21 any interest or charges or any higher rate of interest or charges shall
22 accrue as a penalty for any default, shall be void as to any such provision.
23 (b) Judgments taken in accordance with the provisions of subsection
24 (a) shall be expressed as follows:
25 (1) Judgments upon interest-bearing contracts shall provide: (i) The
26 unpaid principal balance,; (ii) the date to which interest is paid,; (iii) the
27 contract rate of interest; and (iv) that the unpaid principal balance shall
28 draw the contract rate of interest from the date to which interest is paid
29 until payment in full.
30 (2) Judgments upon precomputed interest-bearing contracts shall
31 provide: (i) The unpaid principal balance shall be ascertained by deduct-
32 ing from the remaining total of payments owed on the contract that por-
33 tion of the precomputed finance charges that are unearned as of the date
34 of acceleration of the maturity of the contract, as provided in K.S.A. 16a-
35 2-510, and amendments thereto, for computing the unearned portion of
36 precomputed finance charges in the event of prepayment in full. Any
37 delinquency or deferral charges added to the unpaid balance subsequent
38 to the date of acceleration shall be first deducted from the unpaid balance
39 prior to any such acceleration. The contract shall be accelerated as of the
40 date provided for in the provisions of the contract, or if the contract does
41 not provide for the date on which the contract shall be accelerated, it
42 shall be accelerated as of the actual date of any such acceleration; (ii) the
43 date to which interest is paid, which date shall be the maturity date of

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1 the next installment due after the date of acceleration, except those con-
2 tracts which are accelerated on an installment due date which shall be
3 the date of acceleration; the date to which interest is paid for those con-
4 tracts that have matured prior to judgment shall be calculated from ma-
5 turity date of the contract; (iii) the contract rate of interest; and (iv) that
6 the unpaid principal balance shall draw the contract rate of interest from
7 the date to which interest is paid until payment in full.
8 (3) Judgments upon contracts where the finance charges are com-
9 puted in dollars per hundred and added on to the original balance to be
10 financed shall provide: (i) The unpaid principal balance shall be ascer-
11 tained by deducting from the remaining total of payments owed on the
12 contract that portion of the precomputed finance charges that are un-
13 earned as of the date of acceleration of the maturity of the contract as
14 provided in K.S.A. 16a-2-510, and amendments thereto, for computing
15 the unearned portion of precomputed finance charges in the event of
16 prepayment in full. Any delinquency or deferral charges added to the
17 unpaid balance subsequent to the date of acceleration shall be first de-
18 ducted from the unpaid balance prior to any such acceleration. The con-
19 tract shall be accelerated as of the date provided for in the provisions of
20 the contract, or if the contract does not provide for the date on which
21 the contract shall be accelerated, it shall be accelerated as of the actual
22 date of any acceleration; (ii) the date to which interest is paid, which date
23 shall be the maturity date of the next installment due after the date of
24 acceleration, except those contracts which are accelerated on an install-
25 ment due date which shall be the date of acceleration; the date to which
26 interest is paid for those contracts that have matured prior to judgment
27 shall be calculated from the maturity date of the contract; (iii) the contract
28 rate of interest expressed as an annual percentage figure, which may be
29 taken from the contract if it discloses the annual percentage rate, or it
30 shall be ascertained in accordance with the constant ratio method which
31 is mathematically expressed as follows:
32 2mc 33
34 R = ____________ where 35 p(n + 1) 36 R = rate of charge
37 m = number of payment periods in one year
38 n = number of payments to discharge the debt
39 c = charge in dollars
40 p = principal or cash advancedand (iv) that the unpaid principal bal-
41 ance shall draw the contract rate of interest as determined herein from
42 the date to which interest is paid until payment in full.
43 (c) Upon the entry of any judgment after June 30, 2000, in which a
44 claimant shall be adjudged to recover money, or be entitled to a setoff or

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1 counterclaim, the claimant shall be entitled to have simple interest at the
2 rate of 10% per annum added to the amount of the compensatory portion
3 of the recovery or credit in accordance with the following conditions:
4 (1) No interest shall be added pursuant to this subsection if interest
5 on the claimant's recovery or credit is otherwise provided by law or
6 contract;
7 (2) interest pursuant to this subsection shall be allowed to the claim-
8 ant only if the claimant has served on the party adjudicated to be liable
9 a written offer of settlement of the claim, setoff or counterclaim, in an
10 amount no greater than the amount of the recovery or allowance as there-
11 after adjudicated. The offer shall be served either personally or by re-
12 stricted mail if made before suit is filed, or pursuant to K.S.A. 60-205,
13 and amendments thereto, if made after suit is filed. The offer shall not be
14 subject to revocation for a period of 30 days after service thereof on the
15 party claimed to be liable, but shall be automatically deemed to be with-
16 drawn unless accepted and payment made or credit given within such
17 period of 30 days;
18 (3) if the party claimed to be liable has served on the claimant a
19 counteroffer, any interest pursuant to this subsection shall be added only
20 to that portion of the recovery or allowance which exceeds the amount of
21 the counteroffer. The counteroffer shall be served either personally or by
22 restricted mail if made before suit is filed, or pursuant to K.S.A. 60-205,
23 and amendments thereto, if made after suit is filed. The counteroffer shall
24 not be subject to revocation for a period of 30 days after service thereof
25 on the claimant, but shall be automatically deemed to be withdrawn unless
26 accepted and payment made or credit given within such period of 30 days;
27 (4) interest to be added pursuant to this subsection shall be allowed
28 by the court from 30 days after the date the claimant served such offer to
29 the date of judgment, except that if the party claimed to be liable makes
30 a counteroffer, such interest shall be allowed from 30 days after the date
31 the counteroffer is served to the date of judgment; and
32 (5) an offer or counteroffer made hereunder but not accepted shall
33 not be filed in the case until relevant to the entry of judgment, and neither
34 the offer, the counteroffer, nor a failure to accept shall be an admission
35 against interest nor be evidence in the case until effect is to be given
36 thereto in the entry of judgment by the court.
37 Sec. 2. K.S.A. 16-205 is hereby repealed.
38 Sec. 3. This act shall take effect and be in force from and after its
39 publication in the statute book.