GSC Attorneys' Fees in Debt Instruments
Senate Bill 60 revises North Carolina law governing attorneys’ fees in debt instruments. It rewrites G.S. 6-21.2 to clarify when a creditor may enforce a contractual obligation to pay attorneys’ fees after default, define key terms such as creditor, debtor, and debt instrument, and set a default maximum fee rate of 15 percent. The bill also distinguishes between instruments that specify a fee amount or percentage and those that do not, and it requires notice to the debtor before fees may be collected, giving the debtor an opportunity to pay the outstanding balance without attorneys’ fees within a stated period.
The bill also adds special rules for assignees and debt buyers, requiring them to provide supporting documentation to the court before attorneys’ fees may be enforced, including proof of the original debt and an unbroken chain of assignment. It excludes residential rental agreements from the new definition of debt instrument and preserves an exception for secured debt where the debtor refuses to surrender collateral after default. In addition, the bill amends G.S. 45-21.31 to address how foreclosure sale proceeds are distributed and to clarify when counsel fees for an attorney acting as trustee may be treated as reasonable, tying that presumption to the 15 percent fee framework in G.S. 6-21.2.
The bill’s legal impact is to modernize and consolidate North Carolina’s rules on contractual attorneys’ fees in debt collection and related foreclosure contexts. It would apply only to debt instruments executed on or after October 1, 2025, meaning existing contracts would generally not be affected. Creditors, debt buyers, assignees, trustees, and debtors would all be affected by the new notice, documentation, and fee-limitation requirements.
Because there were no recorded committee transcripts or votes provided, the overall sentiment cannot be measured from debate history. Based on the bill text alone, it appears designed to provide clarity and procedural safeguards while preserving creditors’ ability to recover attorneys’ fees in default situations. The main likely point of contention is the added burden on debt buyers and assignees to prove ownership and document the debt before fees can be enforced, versus the creditor interest in preserving fee recovery and collection efficiency.
The bill amends G.S. 6-21.2 and G.S. 45-21.31, changing North Carolina’s rules on attorneys’ fees in debt instruments and foreclosure-related distributions. It creates a more detailed enforcement framework for fee provisions, imposes notice and documentation requirements, and caps fee awards at 15 percent, while also clarifying how sale proceeds and trustee counsel fees are handled in foreclosure proceedings. The act applies prospectively to debt instruments executed on or after October 1, 2025.
No committee discussion or vote record was provided, so there is no direct evidence of legislative sentiment from the available history. The bill’s text suggests a generally pro-clarity, pro-enforcement approach that also adds consumer-facing protections such as notice and a chance to cure before attorneys’ fees attach. Overall, the measure appears to balance creditor collection rights with procedural safeguards for debtors and evidentiary requirements for debt buyers.
The most notable likely point of contention is the new requirement that assignees and debt buyers provide the original contract, proof of assignment, and an unbroken chain of ownership before attorneys’ fees can be enforced. That requirement may be viewed as a consumer protection against unsupported collection claims, but creditors and debt purchasers may see it as a litigation burden. Another possible area of debate is the notice-and-cure period, which delays fee recovery if the debtor pays the outstanding balance within the statutory window, although the bill preserves an exception for secured creditors seeking collateral after refusal to surrender possession.